Can We Cancel Our Merchant Account Without Paying Early Termination Fee?

In today’s world of payment processing, every now and then we see a newbie applying for merchant account to enter into this world of online business. But such new comers are offered a long contract which very difficult to understand by a salesperson who is forcing and insisting that nothing can be changed in the contract but propose to give you the best deal possible. But it is already late for you to realize that you actually did not got the best deal and now you feel the need to change to a better processor where you get a better deal than your present one. But now your processor asks you to pay an Early Termination Fee also termed as ETF to cancel/break your on-going contract.

Stay with us and we will tell you everything about ETF.

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What is Early Termination Fee (ETF)?

Just like most of us must have faced the ETF earlier on canceling contracts of your apartment lease, cell phone service , etc. we have to pay some extra fee this fee is the ETF. Such fees can be capped for the consumers with the help of law. But, you might have to face the trouble, as a business.

In the field of online payment processing the service providers/ processors help you with the merchant account for which you sign a multi-year contract with the processors that is mostly 36 months long. ETF becomes applicable if you wish to terminate the contract within the 36 months. This fees are taken as a penalty of cancellation.

How much is the cost of the ETF’s?

According to detailed studied the costs of ETF range between $250 to $500 depending upon the location of the business. But, if the cancellation is done early as per the contract then the ETF may go above $1000.

Now you must be thinking of a way to get your contract cancellation done without triggering any ETF.

How to cancel your merchant account without suffering the ETF?

The best way to avoid ETF is, if you cancel the contract when it actually end and before it is renewed automatically. To do so you have to be thorough with the following steps.

Keep information of the exact date on which the contract ends.
Find out the cancellation period before the contract renews.
Inform your processor in the correct procedural manner.
Make sure that no fees are charged.

We also would like to tell you that there are many other processors who help the new businesses with a merchant account with monthly billings and no ETF. These processors are way better than the one’s with complicated agreements and high ETF’s. Many new processors are coming up with great business deals that will help you avoid ETF’s.

What You Need To Know When Applying For A Merchant Account in UK

Merchant Account is a form of line of credit that a processing bank extends to the merchant, in other words, a merchant account is a settlement between a retailer/business man, a merchant bank and payment processor who tries to settle online money transactions through credit/debit card. First the funds are deposited in a merchant account when a online card transaction in done by a customer and later the business bank account receives the funds on daily or weekly basis. Even if it’s a small scale business, to accept a online card payment you need at least one internet merchant account.

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Requirements For Applying Merchant Account :

Even after a high competition of issuing merchant accounts, the process for the same is not a hectic one only a variety of criteria are verified before approval of merchant account application. The criteria include the following:

Business type – to determine the level of risk involved in online transaction frauds and returns. This does not tell us that business with higher risk wont be approved but in the initial stage the vendor may ask for higher fees as a compensation for the risk so that if you have gone out of business or cannot cover any chargeback amount, your processor is the one who will take the hit.
Business Time Length – to determine the length of time in business.
History of Business – The history of business is verified to check any faults in it, if there has been any Bankruptcies or and complaints against the business.
It also verifies if the applicant has had a merchant account or has he/she applied for one earlier.
The personal information of the business owner is also verified, especially his/her personal credit history.

For newbies in business, there are a lot of chances of having a favorable review for application of Merchant Account from the bank that holds the owner’s business/personal account.

Merchant Account Solutions for Subscription and Membership-based businesses

Different types of businesses require different modes of payment. The right choice of payment option that compliments your business should be based on two important variables; first being the type of business you operate and two being the kind of demographic you cater to and want to attract.

A merchant account is a mandatory requirement in order to accept credit or debit cards. And obtaining one might be quite easy if you are a regular business but just getting one should not be your priority. Instead, finding the right merchant account provider that suits your business operations and goals and offers you the services that will help you run your payment process efficiently is of utmost importance.

This is especially important in case of high risk businesses who struggle to find merchant solutions and end up compromising on the quality of services they receive. One such industry that has trouble dealing with banks is the subscription or membership based businesses.

Businesses with products and services like magazines, cosmetics, spas, lifestyle, healthcare, clubs, fashion etc that are consumed on the regular basis come under this particular industry.

Challenges for Subscription- or Membership-based businesses:

The most common reason why merchants with recurring business models are often denied a merchant account is due to the higher risk of chargebacks. There are many scenarios with such businesses wherein the customers forget that they’ve signed up for services.

There is also a greater possibility of friendly frauds occurring with subscription based businesses with customers denying having signed up for services or authorizing for recurring payments and then calling up the bank to revoke their entire plans. Such instances hurt the business and increases their chargeback significantly.

Hence, it always advisable to disclose clear terms and conditions about your refund policies and payment terms during the check-out process.

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Subscription- or Membership-based Merchant Account Solutions:

If you are one those businesses offering subscription or membership options to your customers, you should opt for a merchant account that will give you the ability to accept recurring payments easily and quickly and ultimately streamline your payment process efficiently. Such businesses have a specific payment processing needs that can only be fulfilled with Subscription- or Membership-based Merchant Account Services.

With a subscription- or membership-based merchant account, a customer need not enter their payment details every time. Plus, you don’t have to remind your customers for payments either since you can receive regular on-time payments automatically. You also have the freedom to choose when your customers will be charged i.e. daily, weekly, monthly, yearly, etc.

Such type of merchant account has extensive customizable recurring billing options for the kind of products and services you sell that will the demands of your business as well as customers.