Know When Your Processing Contract Really Expires

Last week I was visiting with the owner of a small manufacturing company in Parsons.

I had shown him how to reduce his processing costs by sixteen percent, thus freeing up almost $60,000 a year to invest back into operations. His current rep had come down from Overland Park, and the last time they had spoken had been the day he signed the paperwork. His staff despised calling his current processor's customer service line; they said it was a mess of auto-messages, phone trees, and long hold times. Simply put, we were ready to do business together. All that remained was to verify that his contract with the other guys was expired, which he was confident had happened last June.

Well, it turns out he was right- sort of. And wrong- sort of. Nearly every processing company out there has a "rollover " provision in their contract- a fact that few processing reps even know about, much less inform their merchants of.

Say you sign a 3 year agreement with a $400 early termination penalty set to expire on May 1, 2012. Come May 1, you have a window, the length of which varies between processors, to notify the company in writing that you no longer wish to use their services. If the window is 30 days, when June 1 comes around and you haven't canceled, you are automatically rolled into another year's contract replete with the same early termination penalties you had in the first three years. Some companies roll you over once, some twice, and some roll their merchants until they cancel within the window or pay the penalty.

Dig out the fine print in your processing agreement, or have your company send you a copy. Find your rollover clause. Knowing how it works will save you some scratch should you ever desire to fire your credit card company.