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When to Switch Merchant Account Providers and How

You may already have the cheapest merchant account
If you're already processing credit cards and you're switching your merchant account because you're seeking or you've been offered lower rates, there's an easier option to consider. The problem with going through the time-consuming process of changing providers is that the savings usually doesn't justify the time necessary to make the switch. New providers will only offer you enough savings to get you to drop your existing account and move to their service. They are still going to maximize their profit.

For example, let's say you're merchant account fees are $2,000 a month and your existing provider's NET profit is $900. A new provider may only offer you savings of $300 a month. Sure, this sounds great at first - but you're still giving the provider $600 every month in profit.

If you're already processing credit cards and have a monthly sales volume of $15,000 or more, you're best option may very well be to lower your rates with your existing provider. We have partners that will work with you and your existing provider to negotiate lower rates and fees and there are no up-front costs. Instead, the only fee is a portion of the savings obtained. Going back to the previous example, our partners would work to get your rates and fees as low as possible - say down to a $150 profit or less. There fee would be a percentage of that $150 savings for a limited time leaving you with far more savings and less trouble than if you had switched providers.

If you're interested in a free consultation, please complete this form to have a representative contact you. If this doesn't seem like a good option for you, the rest of this article will still prove helpful.


Businesses primarily cancel their merchant account because they no longer need to accept credit cards or because they're switching to a different provider that has offered them lower rates and fees. When an account is cancelled because a business no longer needs to accept credit cards, it usually means that the business is being dissolved and there's no reason to have an account at all. However, cancelling a merchant account to switch to another provider that promises lower rates may be more trouble than it's worth – literally.

You may already have the cheapest merchant account
If you're switching merchant accounts because you're seeking or you've been p

Check with your existing provider before you cancel your merchant account
Competition is the driving force behind the high merchant turnover that exists in the payment card industry. Any small business owner can attest to the high frequency at which they're approached by a merchant account salesperson promising the best rates and fees. With so many offers it's tough not to investigate a few, and many business owners do just that. The problem is that they switch to the new merchant account without consulting their existing provider.

Merchant service providers want to retain clients. It's a lot easier for them to keep an existing client than it is to acquire a new one. The same is true from a merchant's point of view. It's a lot easier to have the rates and fees lowered on your existing merchant account than it is to cancel the account and open a new one.

Don't look at the constant flow of new merchant account quotes as an annoyance, instead, view them as a helpful reminder. Each time you're offered merchant account rates that are lower than the rates on your existing account, send them to your provider and request that they match or beat the better quote. Even if you're in a contract, many merchant account providers are willing to lower rates and fees in order to retain your business.

By giving your existing provider a chance to match quotes that you receive, you're getting the benefit of the lower rates without the hassle of cancelling your exiting merchant account and opening a new one.

Avoiding cancellation fees when switching merchant accounts
So what happens if your existing provider won't match or beat the rates of a competitor? The first thing to do is determine if you're under contract, and if so, how much the cancellation fee is to close your merchant account. Even if you're looking at a large fee, there are a couple of things that you can do to avoid paying it entirely.

The first is to read the terms of your contract. Most cancellation fees are void if a merchant service provider raises rates or fees within the contract period. If your rates have increased since you originally signed the contract, or since the last time the contact auto-renewed, you may be able to cancel your merchant account without having to pay the fee.

If that fails, try to pass the cancellation fee along to the new provider that's trying to earn your business. Especially if you're processing a decent amount of credit cards each month, it may be worth it for the new provider to pay your way out of your existing account. Believe it or not, this is something that happens on a fairly regular basis. Most providers won't advertise that they'll pay cancellation fees to their competitors, but they will do what they can to get your business if the numbers work for them.

If all else fails...
If you're existing provider is unable or unwilling to meet lower rates and fees promised by a new provider and you can't avoid the cancellation fee, make sure that it's worth it to switch accounts. Crunch the numbers to figure out if the lower rates and fees will save you enough to negate the out-of-pocket expense of the cancellation fee.

Make sure the new rates are truly better
The final and perhaps most important point to cover before switching merchant accounts, is to make sure that the rates and fees promised by a new provider are really better than what you already have. Especially on a tiered pricing structure, merchant account rates aren't always what they appear to be. Read the article, "Merchant Account Rates: Tiered VS. Interchange-Plus Pricing" to get a better understanding of this topic.

 

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