Can I Get Out of My Contract with Another Payment Processor?

Can I Get Out of My Contract with Another Payment Processor

A question we’re being asked at Dream Payments a lot these days is how can I get out of a contract with my current payment processor?

The saying that an ounce of prevention is worth a pound of cure speaks volumes here. If you’re not already in a contract and you’re just browsing for information, great! You’ve come to the right place to learn more.

If you are, a contract is a contract, right? Well, not necessarily. You have more power than you think.

Here are eight best practices you need to know that will help you avoid the problem in the first place or solve it and get out of a contract without paying a hefty cancellation fee.

  1. Be familiar with the terms of the Code of Conduct.

    While not the law, debit and credit card payment processors adhere to the voluntary Code of Conduct for the Credit and Debit Card Industry in Canada. The card networks – Visa, Mastercard, American Express and Interac – have embedded it word for word in their respective operating guidelines.

    This is the best tool that a merchant has for combatting cancellation fees. Why? Because the Code of Conduct specifically states that any change to a payment processor’s pricing or any associated fee during the term of a contract opens the contract up for renewal. And, this occurs more often than you would think.

    Payment processors generally change their fees once every 12 to 18 months, if not more frequently, either on their own or when the payment network interchange modifies something. When this occurs, it triggers a 90-day window of opportunity to cancel your contract with no penalty. Even if the payment processor is merely passing on the change and not marking it up in any way – for example, Visa might change a pricing structure for a card or introduce some new technology – that changes the contract and opens the 90-day ‘escape clause’.

  2. Find a payment processor that doesn’t charge cancellation fees.

    This may seem obvious, but not everyone thinks of this while doing their research. Always ask the question, then carefully review the contract before you commit. The penalty may be hidden behind terminology such as “exit fee” or “lost profit fee”, so ask for a full explanation of any charges that you don’t fully understand.

  3. Negotiate the shortest term possible.

    The best term is no term and there are companies like Dream Payments that allow you to easily accept Interac® debit as well as contactless and Chip & PIN credit cards without being locked in. That said, as a best practice, you are never in a better bargaining position than before you sign up for a new service.

  4. Open and read everything from your payment processor.

    Under the Code of Conduct, any information on pricing is supposed to be transparent, however that doesn’t necessarily mean it will be presented in bold, headline fashion. It could be embedded as a line item deep in your merchant statement or included as an insert along with several others. It can even be delivered as a general insert in another mailing, separate from your statement. Open and read everything, especially if you are looking for an opportunity to get out of your contract with no penalty. Once something is changing, you’re out!

  5. Be careful of automatic renewals.

    While this is not the case with companies like Dream Payments, many payment processing agreements automatically renew if you do not cancel them before they expire.

    If you are currently trying to get out of a contract, inform your payment processor that you do not want to auto-renew. According to the Code of Conduct, “merchants may provide notice of non-renewal at any point during the contract period up to ninety days prior to contract expiry.”

  6. Don’t fall out of one trap and into another.

    When you are trying to get out of a contract, another payment processor may offer to pay your cancellation fees to get your business. Be wary – this could end up costing you more money in the long run. It is likely the new payment processor will try to recoup those fees in another way. They’re going to get that money back and more, somehow.

  7. Stand your ground.

    If you do decide to cancel your agreement due to a change in your contract and the payment processor says they will charge you a fee for doing so, don’t be intimidated. Let them know that you are familiar with the Code of Conduct and that you expect them to adhere to it. At this point, most payment processors will thank you for your business and wish you well, hoping that you’ll have a change of heart down the road.

  8. Take advantage of dispute mechanisms.

    If you’re still getting pushback about cancelling your contract, reach out to the payment intermediaries. There are links for merchant disputes on the websites for all networks – including Visa, Mastercard and American Express. All disputes that come through the payment processor sites are passed on to the networks for monitoring. The networks themselves also have dispute links directly on their websites if the payment processor is not resolving an issue to the merchant’s satisfaction. Another tool at your disposal is the Better Business Bureau. Their reporting process is public, which provides leverage for business owners when a payment processor is not living up to its obligations.

So, there you have it – it is possible to get out of your current payment processing contract without a huge penalty! The Code of Conduct for the Credit and Debit Card Industry in Canada is very merchant friendly and it opens up windows of opportunity for you to shop around. Get to know it and keep on top of your contract.