Merchant Account Contracts and ETFs

Something frequently overlooked and seldom discussed in account setups is the terms of the contract being signed. Every merchant needs to sign a contract and be aware that there is an early termination for (ETF). Setting up a new account or transferring an existing one has costs for the merchant processing company. Some of these costs are credit checks, Dunn & Bradstreet reports and activation fees that are sometimes waved when the account is set up. When an account is terminated prior to its contract end a fee must be charged to recoup the fees paid out in the beginning when the account was started. With Orbit Merchant Solutions a minimum contract of one year is required, and there is a $250 ETF. The average credit card processing company will have you sign a 3 year contract and the ETF ranges from $350 - $1000.

Unethical and crafty merchant processing companies may try and speed up the account setup with prospective merchants so they get the merchants signature before they are properly made aware of the hidden fees they are required to pay. Once the contract has been signed, the merchant is now locked into the requirements stated on the contract. The option to sign up with another credit card processor is now not a reasonable choice because of the immensely high ETF that will now be required to pay for cancellation. This puts the merchant in a very hard position and could wind up losing hundreds if not thousands of dollars in revenue a year.

To protect yourself, make sure you thoroughly read and understand all contracts and agreements before signing.