Virtually all aspects of a merchant account agreement are negotiable. Business owners can minimize their merchant account agreement fees by comparing quotes and vetting the terms of the agreement.
These are some of the top areas for negotiating:
- Termination Fees- Consider termination fees for early contract cancellation as should industry fees reduce during your agreement, it may be financially beneficial to switch providers. Newer providers tend to be more flexible with this portion of the agreement.
- Consider Cost-Plus Pricing- This method calculates processing fees based upon current interchange rates. While this pricing method has traditionally been offered only to larger retailers, due to an increasingly competitive marketplace, many providers are now offering this option to smaller accounts.
- Negotiate Risk Management and Account Management Fees- Successful negotiation with these two contract areas can result in cost savings of between 5 and 45 percent. Search for merchant accounts offering cost-plus or pass through pricing as they present the greatest opportunity for negotiation.
- Avoid Leases for Low-Cost Equipment and Software- Merchant accounts often offer leases for equipment and software needed for ongoing operation. In many cases, purchasing can result in a lower cost to the organization than long-term leases.
- Ongoing Negotiation- As the size and scope of your organization increases, so does your opportunity to negotiate fees. Be sure to inquire about price break points so you can note to follow up when you cross them.
- Read the Small Print- Before signing the agreement, review the small print to ensure that the terms and fees are in alignment with what you were originally quoted. All fees should be clearly listed along with any additional fees and how they can be assessed.
Each of the above mentioned strategies present the opportunity to reduce your organization’s merchant account expenditures.
