What's in your contract

Yesterday I received an email from a reader of this blog.  It seems that her credit card processor has decided to add a Monthly Minimum to her account.  I explained to her that the only time this would come into play, and affect her, is if she didn't do enough volume to generate enough fees to exceed the minimum.  It's not in addition to Discount Rates and fees, it would be instead of.

She questioned the rights of the processor to do such a thing since she had already signed an agreement (contract) when she met with the rep and he assured her there was no Monthly Minimum.  I suggested that she pull out her contract and look for any part of it that said that they could do just what they had proposed.  Here's what she sent me which was an excerpt from her contract with this unnamed processor:

18. PROCESSING FEES.


a. Merchant will pay Processing Fees in the amount specified in the FEE SCHEDULE
attached to the Application or as otherwise provided for in this Agreement or an
Addendum thereto. Merchant will pay monthly fees equal to the greater of (i) actual
fees incurred, or (ii) the minimum amount of fees as specified in the Application.
Merchant will pay a Corporate Fee for each location equal to $90.00, to be collected via
ACH transfer within 150 days after the initial approval of this Agreement, and within
30 days after each anniversary of the effective date of this Agreement. Merchant Bank
may increase the Processing Fees and annual fees and/or impose additional fees by
giving Merchant thirty (30) days advance written notice effective for Charges and Credit
Vouchers submitted on and after the effective date of the change.

Yep, that's right, they are fully within their rights to add, increase or adjust fees to the original agreement simply by giving the merchant 30 days advance written notification.  Typically, this notification comes via the "Important Information" section usually found on the monthly merchant statement.  Do you ever read those things?  It's been my experience that the majority of merchants never look at that section and, in fact, rarely even look at their statement in any great detail....sad, but true.

Now, let me say this about the above referenced processor.  They are not unlike any other merchant services provider out there.  In the credit card processing business, we are all affected by interchange.  Interchange is one of the factors that affects the processor's cost basis.  And, like any other business on the planet, when their costs increase, they have the right to pass on those increases to their customers, or absorb it and incur the reduction to their personal bottom line.

So what is your recourse if this same scenario happens to you?  Well, you can grumble and complain all you want, honestly but, the fact remains, that you signed a contract and probably didn't read all the fine print.  But, how much does it really matter since every credit card processing agreement that I've ever seen, has some form of the same verbiage in it as the above.

My advice is simply this...make certain that you are looking at, reading and understanding your monthly processing statement each and every month.  This is a huge and ever-increasing cost center for your business.  You absolutely MUST understand what you are paying and why.  Don't ever hesitate to contact your rep or the companies Customer Care department and ask the questions.  In fact, you should be calling at least on average of twice a year asking for a rate review and reduction.  If you don't ask, they certainly won't voluntarily call you and lower your rates.  Hey, it's your business and your profits are at stake here so I'm sure you'll see the value in taking a few minutes and making the call

Thanks for coming by and please don't hesitate to comment on this article or contact me with any specific questions.

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