Any merchant in search of a credit card processing account needs to be 100% aware that merchant service agreements carry contracts and early termination fees.  This is yet another very important piece of information that the fraudulent credit card processing companies will purposely neglect to mention. The reason that they do not mention this fee is because the average credit card processing contract is extremely lengthy, typically 3 years, and the average early termination fee is at least $350. This type of commitment can deter a lot of merchants from signing.  So the processors make their deal look great by using any or all of the previously mentioned fraudulent tactics and make it look even better by not mentioning the contract and ETF fee, or by outright lying and saying they do not have one.  The simple fact is that the fraudulent credit card processors need the contract because it is their insurance policy against a merchant leaving them once they discover all of the shady tactics which were used to entice them into signing up for the credit card processing account.  Along the same lines, when these credit card processors are forced to immediately increase rates because they set up the credit card processing account below their cost and at a loss, the exorbitant ETF fee will deter merchants from canceling and if the merchant does cancel the company will recoup some of the up front loss they incurred on the account.

Keep in mind that credit card processing is a very high maintenance, service oriented industry.  High maintenance requires qualified employees who need higher than average salaries. The fraudulent companies who give everything away and set up accounts below cost are dealing with a double edged sword.  Not only do they incur a severe up-front loss, but they also significantly increase the call volume in their customer service departments due to all of the irate customers calling in because they realized they have been burned on their credit card processing account.  And because these companies already have such a high up front loss and are now being bombarded with high inbound call volume combined with severe lawsuits and legal fees due to fraudulent tactics, they cannot afford to pay enough qualified employees to properly service their credit card processing accounts.  So as a result their customer service is horrendous.  And this is yet another reason why they absolutely have to have a long term contract with an extremely high ETF; To protect them from horrible service and deter improperly serviced merchants form canceling. 

So make sure you are fully aware that if you are signing up for a credit card processing account you will be signing a contract and there will be an early termination fee.  Even if you get set up with a fair and honest company, they will most likely require at least 1 year from you.  There are costs involved when setting up your account such as credit checks, D & B reports, and activation fees that must be recouped and 1 year is usually sufficient. 

If a company tells you they do not have a termination fee, they are lying and they are relying on creative language in their credit card processing agreement to mislead you into thinking they are being truthful with you.  Here are the clauses from a credit card processing program guide or merchant agreement that bind you:

1)The credit card processing agreement will become effective on the date it is approved by our underwriting department  From the date of the approval, the initial term of this credit card processing agreement will begin and will continue in force for three years.  After that, it will continue until it is terminated by either party using written notice.

This is the 1st part of them binding you.  So if you went with a credit card processing company who claim they do not have an Early Termination Fee, you have to ask yourself the question, “Why are they still locking me into a 3-5 year contract”.  What is the point of the contract if there is no termination fee?  Why would they not just say “No Contract”? The reason is you are being contractually obligated to all of the fees pertaining to the credit card processing account and then some for the life of the merchant agreement.  The clauses below will show you all of these credit card processing fees to which you are agreeing even without an Early Termination Fee.

2)Terminating this credit card processing agreement for any reason,you continue to bear complete responsibility for all Credits, chargebacks, adjustments &  fees that result from processing Card transactions pursuant to this Agreement and  other amounts  due or become due under this Agreement.

This is very vague. It mentions credits and chargebacks from credit card processing and those are self explanatory.  But is also mentions adjustments and fees which could mean anything, statement fees, monthly minimums, wireless access fees, gateway fees etc.  And you are responsible for these for the life of the credit card processing agreement which is 3 to 5 years in most cases which translates to hundreds even thousands of dollars. 

3)Neither expiring or terminating this Credit Card Processing Agreement will terminate any obligations or rights of parties according this Agreement which will survive or be perpetual or irrevocable. All provisions within will survive the expiration or termination of this Agreement. Any and all obligations by you to pay or reimburse us for any obligations associated with transactions you have submitted to us will survive terminating this Agreement.

So once again, even without a termination fee you are agreeing to pay any and all obligations associated with the credit card processing agreement. And if you terminated you are bound for the life of the contract.

4)The client will be in breach of this Agreement if they improperly terminate it prior to the expiration of the term of the Agreement, or if the processors terminate this Agreement  prior to the expiration term of the Agreement due to an Event of Default.  In either case, the processors will suffer a significant loss and injury that is very difficult or impossible to estimate accurately. According to this, both parties agree that the amount herein is a reasonable estimate of the probable loss of the processor. That amount will be paid to processors within 15 days after merchant’s receipt of the total amount due, calculated and sent to them by the processor.  If the Merchant terminates this Agreement within the 3 year term of this agreement, merchant will be charged an early termination fee, if indicated on the credit card processing application and agreement. The Merchant’s obligation to the Monthly Minimum Processing Fee will end once the processor receives the Termination Fee.

What this says is that the credit card processors will incur a loss if you terminate early or are terminated early.  The will not know that loss until after the fact, but they will come up with a number afterwards and you will be bound to it.  Sounds very one sided.  It also says if you cancel you will pay a monthly minimum fee up until the point when you pay a termination fee. So if the credit card processing rep is claiming he is waving your termination fee, make sure you understand you are still in a long term agreement and are still bound to hundreds even thousands of dollars worth of fees.

To protect yourself from getting burned by a credit card processing company who is claiming they do not have an early termination make sure you thoroughly understand these clauses and what they are, in effect, binding you too.  It a processor told you there is no ETF, but sends you a credit card processing agreement with these clauses and failed to explain them to you, be advised they did it intentionally.  If you are bound to the fees of a three year credit card processing agreement  and you have a $10 statement fee you just agreed to automatically pay them $10 x 36 months or $360.  What about the monthly minimum of $25 they slid in on you? $25 x 36 months = $900. OUCH!!  BUYER BEWARE!!!

If you require further explanation please call Toll Free: 877-964-1622 or inquire online.  We will take as much time as needed make sure you understand the Credit Card Processing Contracts and Early Termination Fees