Merchant Survey Reveals Purchase Behavior

Survey results show merchants least concerned about contract terms

Merchants have sales people contact them almost every day offering "lower rates" and often switch only to find out they unknowingly signed a long-term contract with an early termination fee. Merchants have shared their experiences and report in the Vantage Card Survey that many do not properly consider the impact of contract terms and cancellation fees in the face of promised savings. Many merchants don't stop to think about cancellation fees before they sign, only after they try to get out of a contract because what was promised was not delivered.

With over 11,000 merchants polled, contract terms ranked at the bottom with only 16.7% of merchants considering it an important factor when shopping for merchant services.

The pitfalls of ignoring contract terms in your negotiation

Unfortunately, contract terms with cancellation fees lead to abuse. One consequence of early termination fees is that sales reps will often say whatever it takes to earn the signing bonuses that are tied to securing long term contracts.

In fact, many merchants report that they were not presented with the terms and conditions (T&C) of the contract at the time of sale. Sales people will tell merchants that they don't have a contract or only present the application forms. In this environment, merchants should not be shocked to learn that the T&C of the merchant agreement are rarely discussed or accurately disclosed.

When confronted, merchants are presented a well crafted argument from sales people that the three-year contract is a benefit as a guarantee of the price quote. Before you buy into this claim, carefully read the fine print to find all the reasons your price will increase.

Contract language also plays an important role in determining your true cost of service. Consider the difference if you pay for all authorization attempts vs. only settled transactions. Or the different ways companies define Mid-Qualified and Non-Qualified rate surcharges. Or will the Interchange fees be returned when issuing cardholder credits?

Shopping for the "rate as low as" without paying attention to the T&C will cost. With merchants focused on rates, the lawyers who write the T&C of the contract seek to lock merchants into a relationship that might not otherwise last when introductory pricing expires and service is mediocre to non-existent.

Read the fine print yourself

Three-year contract terms are a norm and early termination fees can run from hundreds of dollars to tens of thousands of dollars. For most merchants, taking simple steps goes a long way toward protecting their interest.

  1. Recognize that there is contact fine print governing the operation of your merchant account.
  2. Obtaining a copy of the legal T&C before signing the application.
  3. Read all the numbered headings and make sure you have a full copy not a summary.
  4. Pay close attention to the term and termination section.
  5. Discover who is ‘party’ to the agreement and who has authority to legally waive contract terms.


An easy way to stop the corruptive practices that arise from contracts with termination fees is for merchants to stop awarding their business without first reading the fine print. The best way to keep your processing expenses low in a competitive industry is to insist on a month-to-month contract. Don't settle for getting the term and termination fee waived; true month-to-month agreements are available. Consider the freedom to switch providers the biggest deterrent to poor service and price increases and write your RFP accordingly.

A sign of confidence

When selecting a payment processing partner, consider that a month-to-month agreement is a sign that the provider you choose is confidence in their ability to deliver a high level of personal service, competitive pricing and overall do the right things to earn your business every month. Everyone is going to tell you their service is the best, but it is wise not to get locked in to a long term contract before they prove it.

About Vantage

As a boutique payment processing firm, our goal has never been to be the biggest, instead offering real value and personal service. Since 1996, we have focused on merchant education and building strong merchant service relationships. In our history, we have never had a contract termination fee. And Vantage is leading the way forward in the payment processing industry, offering a month-to-month merchant agreement and advocating for all providers to do the same. Vantage merchants also enjoy a merchant loyalty program called Vantage Points where they earn rewards from distinguished program partners like: American Airlines, Marriott, Hyatt, Staples, The Home Depot®, Starbucks Coffee and many more. Please include Vantage in your RFP.

by Ty Hardison

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