Rates Vary By Industry Type

RETAIL

face to face vendors

MOTO

mail order or telephone order

ECOMMERCE

all internet based transactions

RESTAURANT

Including quick purchase, small ticket

SUPER MARKET

grocery stores with over 20% perishable

FUEL

gas, propane, incl. pay at pump

HOTEL

motel, lodging with deposit reservations

AUTO RENTAL

advanced deposit 
on reservations

EMERGING MARKETS

education, charity, government, utilities

Are you a prisoner? If you are locked in a contract with a high cancellation fee, your processor is holding you hostage.

ETF: Early Termination Fees

Cancellation Penalty Fees

Cancellation Fee Penalties and Termination Penalties are just that: penalties for exercising your freedom of choice in the marketplace to choose another company. But they don’t want you to call it that. (the fine print may even state that it is not a penalty to prevent litigation.)

Some cancellation fees are justified

If your merchant services company provided you with a free or discounted credit card terminal, ecommerce software or shopping cart installation, then it is an honest way to recoup their expenses which otherwise would have been subsidized from long term processing revenue.

These fees are usually automatically debited from the merchant’s bank account for cancellation of contract or agreement prior to the expiration of the contract. The defense is that processors incur substantial expenses in signing up a new merchant including new equipment programming, file setup, billing administration, credit, background and Match List/TMF checks and network setup fees plus registration with associations.

Early cancellation fines are usually in the “Termination” clause, on the last page of the agreement contract.

Sometimes ETFs are not justified

ETF fees are usually not more than $300 and may be prorated based on number of months left on contract. Under special circumstances these fees may be waived. It may be worth it to pay an ETF if the savings and improved service to switch is substantial. Some processors require 30 days advance notice in writing before the automatic renewal of a contract. Merchant Services Group LLC does not auto renew.

These fees are understandable but can be unnecessary and cruel. Some cancellation fees are over $100,000. This is grotesque and should be an antitrust violation. This is a free country and free market economy. If you don’t like your Processor’s service or rates, you should be free to go with another Processor.

A Cancellation Fee may attempt to stifle competition by penalizing you for not being satisfied with them! One excuse they use is that they incur considerable expense by taking you on and this is a reasonable attempt to recoup the loss.

The only real expense incurred is if your Processors has provided free Terminals, Software, Paper Rolls, Labor for Installation or Gateway Setup Fees. However, many charge you for these things and most Processors recoup those expenses from the fees they charge you after 3 months of processing.

Good advice

Never, ever agree to a cancellation fee if at all possible. Remember, everything is negotiable!