I wish it wasn’t so. But, if I had a dollar for every time I’ve counseled a merchant distraught over the agreement they signed with their processor I’d be soaking up rays in Fiji about now. Unfortunately, most merchants simply don’t take the time to read the fine print until it’s too late. We’re all guilty of it, but when are we going to learn our lesson? I’m going to use a very nasty word here but it is our responsibility (there i said it) to read and understand the agreements we sign. If we don’t, we have no one to blame but ourselves. You can’t simply hit the “I Agree” button and hope your personal e-fairy will keep you from all harm.

Even if we read the “Terms & Conditions” we can be fooled by the language because it has been written by, yep you guesses it, an attorney. So you have three choices:

1.) become an attorney
2.) hire an attorney
3.) educate yourself

Unless you have absolutely no soul or are made of money, option 1 & 2 are likely out. That means you’re going to have to rely on yourself to make sure that you completely understand the agreement you are signing. I have attempted to outline below the most critical points hidden in ‘Terms & Conditions’ or as I like to call them the “Seven Deadly Sins” of a processing agreement.

1.) Make sure you get a copy of the Terms & Conditions before you sign anything!!! There is a common and deceptive trick used by a lot of credit card sales people and the processor(s) they represent. It goes like this:

You are presented with a processing application where your information and the processing rates are written. You are asked for a void check and then asked to sign the application. You’re told that the application will be submitted and you’ll be notified once your account has been approved. STOP!  Read the fine print above your signature. Do your see where it says that by signing this application you are agreeing to, have read and are in possession of the “Terms & Conditions?  Do you actually have them?  Have you thoroughly read them?  No. Well then ask your representative to provide you a complete copy of the “Terms & Conditions” and then take the time to read them.  Your sales rep will wait or better yet, have them come back tomorrow after you’ve had time to digest the entire agreement.  If your representative tells you that the application is the entire agreement, he or she is lying and you should simply find someone else with which to do business.

2.) Cancellation fees.  You can negotiate completely out of this.  If you can’t don’t sign the agreement.  Find another processor.

3.) Cancellation Policy. You should be able to cancel with a 30-90 day written notice.  Anything longer is not necessary and you should not agree to it.  If you do need to cancel, spend a few dollars and send the cancellation by registered mail with delivery signature required.  For the cost of a bag of movie popcorn you can be sure that your processor received your request.  One more thing, save the return receipt that is mailed back to you as your proof that the processor received your letter of cancellation.

4.) Term.  Don’t sign anything that commits you to a term longer than a year.  Let’s face it, very few of us know what’s going to happen later today let alone a year from now.  Some processors lock you into 3-5 year agreements with hefty cancellation penalties.

5.) Rate Increases.  No one likes them. But let’s be realistic here.  Rate increases are a fact of life.  But, and a big BUT here, never sign an agreement that allows the processor to raise your rate without notifying you.  By notification I mean US mail, email, text message or all of the above.  What I don’t mean is carrier pigeon or mental telepathy.  Pick a notification method that you will actually read.  If you can’t agree with the increase then you have the option to cancel because you paid attention to items 2 & 3 above.

6.) Dispute Arbitration.  This one is harder.  Everyone wants venue on their home court should a dispute arise but it’s difficult to negotiate at best.  You should at least try to get the processor to agree that, should a dispute arise, the person bringing the dispute has venue. This means that you as a lowly and insignificant customer would have home court advantage should you not be able to resolve a dispute directly with your processor.

7.) Assignment. You should not agree to having your processing agreement assigned to any other party without your notification. Often a processor will sell all or part of their portfolio which may include your agreement. You need to be aware of when this happens so that you can obtain a copy of the terms and conditions of the acquiring company. The language of your processing agreement may be such that if your agreement is assigned you by default agree immediately to a new set of “Terms & Conditions issued by the acquiring company. This is where the game can radically change and you need to be aware so that you can react appropriately. Mergers aren’t necessarily bad. You just need to understand the implications a merger can have on your business.

Conclusion.  I hope this has helped you as you enter into a processing agreement for your business. If you just aren’t sure about a paragraph in your processing agreement, copy it and paste it below as a comment and I’ll do my best to untangle it for you. Be aware that I’m not going to read every word of your agreement. That’s your job. But I will help with a particularly difficult section to insure that at the very least you understand the implications to you and your business.

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