Eventually, items like changes in terms or sudden increases in fees might have you wanting to switch from your current merchant account to a better one. Even without any particular problems, once you start to look into the details of your current account, you might find better options elsewhere. Here are some of the factors to check when looking for a new merchant account processor, and even a few reasons that a high risk merchants credit card processing account might work in your favor.
Increases in Fees
Understanding how much you’re paying for a merchant account can sometimes be confusing. You could get a deal that you feel great about, and a few months later the rates could skyrocket and leave you regretting your decision. One option to help you avoid any incidents like this would be to choose a subscription-based service that would only charge a flat monthly fee without any markups. Other services can make rates higher at any time depending on the current market or any number of other reasons.
Contract Terms
Knowing the terms and length of your contract is vital. You should find out before the end of your contract whether there are early termination fees, cancellation fees, or if there is an auto-renewal clause that could leave you in another contract period without your knowledge. Some merchant account processors have a month-to-month service that lets you cancel at any time without any extra fees, which is very useful when you want to remain flexible in your use of payment processors.
With early termination fees and “liquidated damages,” getting out of a contract with your present processor could cost more than what it’s worth to switch in the first place. If you’re in a contract that has a liquidated damage clause, you could be forced to pay the estimated processing fees for the rest of the contract if you cancel early. This would be your average monthly processing fee at the time of the cancellation multiplied by the remaining months in your contract. This is something to look for when signing a new contract as well.
Getting out of your old contract and signing up with a new processor could mean that the new processor would be willing to pay some of your early cancellation fees. This sounds great up front, but make sure to read all the information within the new contract to see how the new processor will make up for buying out the old one. This will mean that the new processor will charge you higher processing fees, or something similar.
Customer Service
Image via Flickr by RaHul Rodriguez
If your current processor only has an automated customer service department, then you should look for one that has live customer service to cover your business 24 hours a day, seven days a week. When running a business, you don’t have time to sit around and listen to an automated system if your processing services are down. The best situation is if you can find a processor that will give you an actual representative’s name, number, and hours so that you can directly contact someone if necessary.
When to Contact Your Old Merchant Account
If you decide to leave your old merchant account and sign up with a new one that has better terms, fees, etc., the best way is to wait until after you have already switched to the new merchant account. If you wait at least three business days after you stop using the old processor, then all of your pending transactions will be complete, and the deposits will be in your business account. The old merchant account will continue until you decide to call them and officially shut it down. Then, make sure to get a cancellation number or a ticket number for proof, in case you receive more fees after you’ve canceled.
There are many reasons that your business might want to switch to a new merchant account, most of which will save you money in the long run. If you need a high-risk merchant account, there’s all the more reason to change as soon as possible. High-risk account providers can assure certain types of businesses that they will always have card processing services, even when these businesses face challenges that standard providers won’t deal with.
