When you have a merchant services contract with your bank, you might not be aware of all the hidden costs and fees that come along with it.
Merchant services contracts (also known as payment processing agreements or payment processing services contracts) are standard contracts that most banks and credit unions use to facilitate transactions with their merchants. They give businesses access to payment processing, which is how they can accept credit card payments from their customers, and sell them other products or services.
These contracts are often seen as a way for banks to make money from small businesses without charging them extra fees. But what if your bank wants access to even more money from you? This guide will explain how you can get out of your merchant services contract and get out of debt —
Know When You Should Get Out of Your Merchant Services Contract
There are three situations that are common reasons for merchants to get out of their contract:
– They’re having a hard time making ends meet.
– They want to branch out into another service line.
– They want to start processing payments through a different form of payment, like using a credit card reader instead of your bank’s own terminal.
If any one of these happenings apply to you, it might be the right time for you to get out of your merchant services contract.
Discover If You Should Get Out of Debt
Before you can decide if getting out of your merchant services contract is a good idea, you need to figure out how much money you really owe.
If you’re not sure how much debt you’re in, start by looking at your bank statements for the last six months and add up all your transactions.
Then calculate how much money was collected from each transaction. Make a note of the total amount of money that came in during the last six months.
Once you’ve got those two figures, subtract your total expenses from those totals to get an idea of what’s left over.
Understand Why a Merchant Services Contract is Important
A merchant services contract is important for small businesses because it helps them take credit card payments from their customers. In addition, it provides them with the ability to offer more products or services to their customers and process transactions themselves. This allows businesses to grow without having to pay additional fees on top of their monthly merchant service fees.
When you sign a contract with your bank, you agree to give them access to your business’s credit card information so that they can process transactions through their payment processing system. Your business has no say in how the bank processes transactions – all they can do is provide the information and hope for the best!
Most contracts include terms and conditions that allow your bank to change its terms at any time – even if there are changes in the law. These terms might include changing the price of your monthly fee, changing how much money they want from your business each month, or changing whether or not they’ll charge you additional fees. And since most banks have contract cancellation clauses, these “changes” can come suddenly and without warning!
Find Alternatives to Avoid Being Borrowed Into Debt
When you have a merchant services contract with your bank, you might not be aware of all the hidden costs and fees that come along with it. With a merchant services contract, you give your bank access to your customers’ credit card payments and they can use that money at their discretion. You also pay fees for processing credit cards on behalf of the customer.
But what if your bank wants more money? This guide will explain how to find alternative payment processing methods or choose a different vendor, so your bank doesn’t take advantage of you and force you into debt once again.
Here are three ways to avoid being forced into debt:
Determine Whether the Bank is the Right One for You
Before you sign a contract, it’s important to understand the bank’s financial goals and business model. What are they trying to accomplish? What is their approach? Is it possible for you to successfully work with them in the long-term?
It’s also important to ask what your merchant services company can do for your business. What types of tools will be available for you on their platform? Will they provide marketing resources or help with local search engine optimization and other digital marketing strategies that might be beneficial for promoting your business? These are all things to consider before signing a contract.
Check With Other Banks Before Shunning Them
If you don’t like the terms and conditions of your current bank, that’s okay. But if you’re not careful, you might give up more than you bargained for. Before you decide to switch banks, ask them to show what other banks offer in terms of merchant services. It is important that small business owners are aware of their options before they make a large decision like this.
1) Banks will often require that their merchants sign a contract with them for a minimum amount of time. Sometimes this minimum is for an entire year and sometimes it’s just for six months. Even if you can break your contract early, it might be harder to find another bank willing to work with you after breaking your agreement with the first one.
2) Some banks will charge merchants a fee if they break their contracts early or at all. These fees could cost as much as several thousand dollars!
3) If your bank offers interest on purchases made through its service, there’s a good chance they’ll offer lower interest rates or no interest at all when working outside of their network.
If you’re in debt and you’ve been looking for a way to get out of your merchant services contract, you’ll find this guide helpful.
If you want to get out of your contract with your merchant services company, make sure that you’re not signing up for anything that’s too expensive. If the service is too expensive, it doesn’t make sense to stay with them.
What are the benefits of merchant services contracts?
A merchant services contract can be a beneficial agreement for both the business and the bank. For businesses, it allows them to accept credit card payments from customers and sell them other products or services. For banks, it provides a legal framework for processing card transactions, protects business from liability for fraud, and provides a central point for managing customer relationships and issues.
What are the hidden costs and fees associated with merchant services contracts?
There are a number of hidden costs and fees associated with such contracts, however, some of the more common ones include:
– Processing fees: These are deducted from the amount that businesses are charging to their customers for their products and services. These fees go directly to the banks that provide the processing service.
– Network charges: These are charged to businesses whenever they process a transaction through a network that is connected to their bank, such as Visa or MasterCard networks.
– Merchant discount rate (MDR): This is an interest rate that banks charge merchants on transactions that take place through the banks’ payment processing networks.
– Currency exchange rate fees: These are conversion fees charged by banks when businesses convert funds from one currency into another currency.
– Monthly servicing fees: These are fees that banks charge businesses for each month in which they have their processing services activated.
– Application and setup fees: These are additional fees that some banks charge for businesses to set up their accounts or accounts with the banks’ payment processing services.
How do merchant services contracts work?
A merchant services contract can be really beneficial for small businesses, as it can help them increase sales and volume by efficiently processing credit card payments. On the other hand, merchants may end up paying a significant amount of money each month if they don’t do any research before signing up with a payment processing company.
A good way to know if merchant services are really necessary for your small business is to ask yourself the following three questions:
1. Are my customers willing to pay with credit cards?
2. Can I easily accept credit cards payments through another channel?
3. Will my transactions be profitable? If you answered ‘yes’ to all three of those questions, then you should definitely consider signing up with a payment processing company. However, if any one of those answer is ‘no’ then you can likely handle payments through another channel or with a standard credit card terminal (if available) without the need of merchant services.