Merchant Account Contract

Much of the ill feelings toward the credit card processing industry are a result of horror stories surrounding lengthy contracts and hefty cancellation fees. The negative stereotypes aren't totally undeserved but their origins are quickly becoming a thing of the past.

Not too long ago merchant account contracts were a fixture in the bankcard industry. If a business wanted to start accepting credit cards they had little choice but to enter a lengthy agreement with a provider. The prospect of terminating such an agreement prior to the end of the term often meant paying substantial fees.

While there are and probably always will be merchant service providers that insist of imposing a contract term and cancellation fee on the merchants that they do business with, industry competition is making this practice increasingly difficult. Some providers leave mention of contracts out of their marketing language and impose them only on those merchant who don't know that they could have avoided it with a little negotiation.

If you're in the market for a merchant account there are a few things that you should know about contracts and cancellation fees.

Not all merchant accounts have contracts. In fact, in the online marketplace where competition is highest merchant service providers that require a contract term and cancellation fee are in the minority. Many of the largest independent sales organizations no longer require merchants to sign a contract term when opening a new account. You can find these providers by getting merchant account quotes through a website like CardFellow or by performing a simple search using your favorite search engine.

Even if a provider says they have a contract term, there's probably a way around it. It all comes back to competition and the fact that there's a lot of it in the credit card processing industry. A merchant service provider will do whatever they can to earn your business and if that means waiving a contract and cancellation fee, they'll do their best to make it happen. All you need to do is ask. When it comes to merchant accounts almost everything is open for negotiation and contracts are no exception.

Sometimes savings can justify a contract. I don't mean to throw mixed signals in this article but I'm going to go out on a limb and mention an instance where it's O.K. to consider a merchant account that requires a contract term. The only situation where this is justified is when the rates and fees of an account with a contract will generate enough savings to negate of accounts without a contract. This circumstance is rare but it can and does happen.

If you're already locked into an account with a contract there are a couple of ways that you may be able to cancel the merchant account without having to pay a cancellation fee. First of all, look for small print in the merchant service agreement that waives the cancellation fee if rates and fees have changed during the contract period. If this is the case you will be able to close the account without getting whacked.

The second option is to have another merchant service provider pick up the tab. If you're processing enough volume to justify the expense a new merchant service provider may be willing to pay the cancellation fee of your existing provider if it means they can earn your business. Like so many things having to do with credit card processing, all you have to do is ask.

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On September 15, 2011 Beverly said:

I recently closed my merchant account with NPC after being with them over 15 years only to be socked with a $250 'early termination fee'. My last contract was in 2007. After numerous calls to the merchant support number and numerous - what the last support told you was incorrect - They said that even though my contract states the initial term is 36 months, that by signing the application I was also agreeing that I had read and understood the separate Terms and Conditions that would have been presented to me in addition to the application (which conveniently did not have to be signed). Even though one support person said no one would have the authority to waive the fee, when I was connected with a supervisor he said he did have the authority but no grounds and referred me to the legal department which has no phone number or email and has to be contacted by my lawyer. WHAT A RIP!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

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