Things to Consider Before Accepting Credit Card Payments

Last Updated on December 28, 2011

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A merchant account is an absolute necessity as a business owner. With many consumers switching from using cash to using credit or debit cards, not accepting them as a business drives potential clients away and causes them to seek other avenues for goods and services. Before your business is able to accept Visa, MasterCard, Discover or American Express cards, you need to select a company to obtain a contract from. Don’t ever sign a contract without first reading through the terms and conditions completely to ensure you know what you’re agreeing to and don’t be afraid to bring up anything that appears questionable or you need explained in other terminology.

The length of the contract is one of the first things to consider. A length-specified contract lasts for a set time period, typically from one to five years but range at two or three as an average. If the contract is terminated before the specified term has expired, the merchant is subjected to additional fees.

Take notice in a contract for an auto-renewal term. An auto-renewal automatically renews the contract for another full term if it is not cancelled before the term expires. Be mindful of the date your contract expires so you can decide whether to renew the account or switch to another provider.

Another option is a no-term merchant account, which is ideal if you’re unsure of how the services are going to be in terms of reliability and support. These merchant accounts exist on a month-to-month basis and can be cancelled at any time since no set term is specified.

An early termination fee is common in contracts that are specified for set time periods. Some accounts also charge fees on top of the early termination fee for lost profits. Shop around with accounts to ensure you get the best deal that suits your needs without signing on for something that is questionable.

It appears that a month-to-month contract is more favorable for merchants, but account providers know that they need to give merchants something to entice them to sign a contract. Typically an account provider will place a term in the contract that locks in a certain price for the length of the contract, while a month-to-month has no guarantees and allows the provider to increase the price as much as and however often they want.

A merchant account provider may also be willing to give you a trial period to test the services before requiring you to sign a contract, which may be desirable if you’re new to the merchant account business. Ask other merchants in the area who they use and how their experience has been before you begin shopping around.

Merchant account providers have a lot of competition both online and offline and realize that they need to cater to you to gain your business. If you want to sign on with a company but want to have a term modified, ask them to see if they will accommodate your request. The worst that could happen is that they say no and you seek an alternate provider.

If you do end up in a contract and want to cancel you can try to avoid paying fees. Examine your current contract to determine if there are any loopholes to paying the fees, such as exorbitant rate increases. Another option is to ask a different account provider to pick up the tab in exchange for switching your account to them.

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