Breaking Up Is Hard to Do: Why You Need to Terminate Your Merchant Account Contract Today

Breaking Up Is Hard to Do: Why You Need to Terminate Your Merchant Account Contract Today

Every high-risk merchant has heard the stories. A merchant account provider simply terminated the processing account of an online merchant in the same industry sector with no warning and no explanation other than, “You’re in the wrong type of business. It’s not acceptable to the Risk Management Department.”

This after the owner applied for a merchant account through a sales agent, provided tons of paperwork, truthfully discussed his business plans with the underwriters, waited several weeks, and finally received approval to begin processing. Two months later, he got the call from his payment processor: 30 days’ notice to migrate his processing.

Another frightening — but common — tale circulates about the poor guy whose business grew too quickly. Transactions exceeded the volume estimates tied to the merchant account contract, and the provider of his bad merchant account refused a request for additional volumes. Funds were held until volumes stabilized. Without operating funds, he couldn’t manage the business.

Both stories make online merchants fearful that the same thing could happen to them. After trying so hard to gain approval in the first place, they dread having to go through it all again. What they really want is to focus on running their businesses, not the vagaries of payments.

Though breaking up is hard to do, ending a bad merchant account contract could be exactly the right move to ensure future business happiness. Read on to know why you should terminate yours today.

Bad Merchant Accounts May Seem Like a Good Fit, But Will Never Lead to Long-Term Happiness

Banks willing to work with higher-risk businesses mitigate their own risk by charging high transaction fees and huge reserves, and insisting on a long-term merchant account contract with a high early termination fee (ETF). Fine print in the contract may include “hidden” fees that are hard to understand if discovered because they were never explicitly discussed before the contract was presented for signature.

In other words, some merchant banks think high-risk merchants should pay a lot and feel good about it, just for having the privilege of processing payments with them.

Of course, all high-risk businesses don’t process directly with a merchant bank. The payments industry supports many types of payments processors, not all of which provide services that result in happily-ever-after relationships.

What makes a bad merchant account, bad? And how can merchants recognize it before the relationship sours and they receive notice?

When approaching a new processing relationship, high-risk merchants should define the good merchant account characteristics that best serve their ongoing payments processing needs. In other words, what do they want for the long term?

Good Merchant Account Behaviors Get the Win

Merchants’ ultimate goal for payments processing is to establish cost-effective merchant processing solutions that support their projected processing volume growth. For many online businesses, this includes the ability to expand internationally.

These merchants want a reasonable monthly processing limit that can grow with them, and a fee structure with no up-front reserve requirement. They want no “bait and switch” behavior or hidden fees. If promises were made, they expect them to be kept.

Ideally, they also want payments processing partners who will work with them to resolve fraud and chargeback issues should they arise — as they inevitably will.

To win in the payments game, high-risk merchants need a steady, secure, and reliable merchant processor that understands complicated CNP online business models better than traditional banks do.

Good merchant accounts are out there, there’s one for every merchant. Turn bad merchant account behavior on its head — terminate your merchant account today — and get the win.

How to Plan YOUR Move to a New Merchant Account Contract

If you’re ready to end your bad merchant account relationship, there are a few pointers to consider when planning the move. You’ll want to transition to a new bank without causing a spike in chargebacks or a disruption in your business services. And you’ll need to migrate your merchant volume in a way that’s both effective and long-term.

Above all, don’t panic! One of the worst things you can do is to shop your account to many agents and banks. By doing so, your personal financials will be widely exposed, which can put you at risk of “bait and switch” operators.

Instead, find the right payments processor to migrate you properly to a stable, long-term merchant account relationship. You’ll want to find someone who can work with you to assess different payment channels and help you choose the right payments processing path and partners to support your specific business needs.

Finding the right payments processor and the right merchant account contract is like finding a partner to alleviate sadness and relieve the burden of that relationship gone bad.