Merchant processor termination fees

[tdgjrb]

Just looking for some advice or other merchants' experiences.

We have been using WorldPay (originally one of its predecessors) for over 9 years. We have a fairly complex inventory and retail operation, so we took our time in switching to Square once were satisfied all of our use cases were sufficiently covered.

When I contacted WorldPay to terminate my credit card processing agreement with them, they told me that there would be a $495 termination fee per merchant id (we have 4) UNLESS we switched back to using our old POS and gave them a 30 day notice of termination.

So I am curious if anyone else has run into a similar issue and if there was anything you were able to do to avoid or reduce this termination fee?

Thanks for sharing!

[TheRealChipA]

Hi @tdgjrb.  I’m basing my answer here on the assumption that you have already switched your operations to Square and that you are processing card transactions through them, now.  You did not explicitly say that, but I’m reading between the lines of your post.  So…..

Unfortunately, you are probably stuck between a rock and hard place here.  Here’s why.  All traditional merchant processors like WorldPay have a termination notice section in their contracts.  It’s standard, it’s expected and it’s allowed both legally and by regulation.  In order to avoid the termination fees, you must do everything in that termination notice section, especially giving them the required notice.

You might be tempted to give them 30-day notice, continue processing with Square, and then close your existing WorldPay accounts after 30 days.  I’d warn against that strongly.  This is because most traditional merchant processors also have inactivity penalties and such built into their contracts that will kick in, and these are usually significantly higher than that $495 per account.  And, since WorldPay already knows you want to close your account because you tried to do so without notice already, they will be watching for this and trying this could land you in possible legal trouble.  So, if you’re going to try something like this, seek competent legal advice first.  Of course any competent legal advice is going to cost you a good bit more than $495 x 4, so there’s that to consider, eh?

There’s not a whole lot you can do here.  You might be able to get them to compromise and only charge you for 2 of the 4 accounts.  But that would surprise me if they agreed to that unless you could prove severe financial distress.  After all, a contract is a contract.  I wish I could give you better news now, or even a suggestion.  

Unfortunately, this is probably one of those things that go into the “hard lessons learned” box that all of us business owners have. I speak from experience here. Many years ago I did something similar because I didn’t read my contract. Thankfully it was only one merchant account, though. I was so  glad to leave WorldPay that I didn’t really care. 

[tdgjrb]

Hi Chip,

While this is not the answer I was hoping for, it is what I feared.

I am normally very diligent about my contracts, and it was my mistake for not reviewing terms on a 9 year old agreement. I stupidly thought of the agreement like a cellphone or a lease plan where any termination penalties roll off eventually. WorldPay certainly made a chunk of change off my processing over those years.

I'm still looking for options, but I think you are correct that I just bought myself some education.

Thanks for taking the time to write your thoughtful response.