Cancelling a Merchant Account Without Paying a Fee

Man tearing a contract in halfPart 2 of 2 – Taking Action

If you read Part-1 on how to prevent getting into a bad merchant account contract, we’re now going to cover the process of cancelling a merchant account that has an Early Termination Fee (ETF) — also sometimes also called a “Deconversion Fee.”

Getting Prepared

Before cancelling a merchant account, there are a few things you may want to do if you are expecting to be charged an ETF. First, check your last three months’ statements to see if any of your fees have been raised. Most state laws (and many contracts) say that if your fees have been raised during your service agreement, you can cancel with no penalty within a certain time frame (usually 30-90 days). If you just signed up with the provider and want to cancel because you were deceived by an agent, gather any supporting evidence that proves that you were misled about pricing or cancellation terms.

If you are going out of business, Andrew Schrage, co-owner of Money Crashers Personal Finance, notes that some contracts have conditions to waive the fee under such circumstances. Be sure to reference your agreement to find any provisions that allow you to terminate service without an ETF. Keep in mind that even if you find provisions that allow you to cancel without an ETF, it doesn’t mean that a processor will automatically waive your fee. Therefore, it is advised that you prepare for an ETF by taking the next steps before cancelling your service.

1. Close Your Attached Checking Account

When you signed up for your merchant account you likely granted the processor access to your checking account. Most often this is done so that your sales can be deposited from your merchant account to your checking account, but once a provider has ACH access they can also make withdrawals without prior notice.

Early Termination Fees are almost always automatically debited from a merchant’s attached checking account the moment they cancel service. The only way to prevent a processor from taking the fee from you is to cancel your checking account and notify the bank that you do not authorize any further transactions from it. One tactic for ensuring that the bank does not hold you liable for withdrawals after the account is closed is to inform them that you think the account number has been compromised and that you fear unauthorized withdrawals. This tactic also keeps the processor out of your account for any other surprise fees they might want to take at another later date. For instance, merchant account providers are notorious for collecting a final PCI Compliance Fee after an account has been closed, even several months after the fact. Keep in mind that you should pay any legitimate fees owed to the provider (such as remaining processing fees) because the processor has full right to them.

It’s important to note that although closing your checking account will keep a provider from electronically collecting remaining fees while you fight an ETF, the provider may threaten you with lawsuits, credit score damage, collections, and/or placing you on the Terminated Merchant File (a highly unethical tactic). It’s up to you to decide if the fight is worth the risk.

2. Collect Supporting Documentation

Gather any documentation that supports the reason that you should not be charged an ETF. This documentation could show that the processor has recently raised your fees, modified the contract, or breached the provisions of the contract.

Create a spreadsheet showing how much you have already paid the processor in fees. If you can definitively show that the processor has likely profited from your account, there should be no need for a an ETF. Alternatively, use a spreadsheet to compare fees from your last provider to your current provider. If you current provider’s costs are more expensive, but you were promised low fees, you may be able to use this information as leverage with the provider and other reporting agencies.

3. Zen and the Art of Negotiation

Lastly, prepare to be courteous. The person on the other line is a human being and is more likely to help you if you are nice and friendly. Remember, you signed a contract and the provider does not necessarily have to waive any fees that you agreed to pay in writing. If you go into the situation with a bad attitude, they will be far less likely to consent to your requests.


Methods for Fighting an Early Termination Fee

Whether you have already involuntarily paid an ETF or managed to keep the provider from taking it by closing your checking account (which the provider is fighting), the tactics below can help you ultimately win the fight for your money.

1. Get Your Agent Involved

Getting the agent who setup your account involved can solve a lot of problems. In some cases the agent actually makes the final call on whether or not the ETF should be charged. If the agent values your relationship, and has any influence in the matter, he should be able to get it waived or reimbursed. Additionally, if the agent is independently contracted and you can prove he lied about contract provisions or fees when setting up your account, you could threaten him personally with a lawsuit and even sue for damages.

2. Make a Case

Most providers require written notification of an account cancellation. If you have documentation that proves, or even suggests, that your ETF should be waived, be sure to submit copies along with your cancellation notice. Your cancellation letter should provide an explanation of why your ETF should be waived in reference to the supporting documents. If you did not expect an ETF, but had it taken anyway, this tactic can also be used to get the fee refunded.

3. Reverse the Fee

If an ETF has been debited from your checking account by surprise, get your bank involved. Many banks will reverse the charge if you report it as unauthorized. However, if the bank where you keep your checking has also provided your merchant account, this tactic may be fruitless. Once you have successfully reversed the fee, it’s probably a good idea to close the checking account.

4. Threaten Public Complaints and Official Reports

If an processor is refusing to waive or reimburse an ETF, there are a few places that you can file complaints that will get a merchant account provider’s attention. We’ve previously covered these places in another article titled “How to Report Bad Credit Card Processors” so check it out after you finish this article, but before you start filing reports be sure to speak with an upper level manager and let them know that you are about to move forward with this tactic. Be specific about where you will file complaints, as it will show them that you mean business. If they still refuse to work with you, start filing reports and you may be surprised how quickly they change their tune when a third party gets involved.

Bottom Line

Although merchant account Early Termination Fees are often imposed under ethically questionable conditions, they are perfectly legal in most cases. Your best chance of avoiding an ETF is to eliminate it prior to setting up an account. For those who are already stuck in this unfortunate situation, preparation and courteous attitude can make all the difference. In the event that a processor will not budge, filing reports and public complaints may get the job done.

Do you have a story regarding an Early Termination Fee battle? Tell us about it in the comment section!

Related Articles:

Top Rated General Use Processors (Retail, Service, E-Commerce, etc)
View Website See Review View Website See Review
Top Rated Mobile Processing Apps (iPhone, Android, etc.)
View Website See Review View Website

See All Best Rated Processors

Getting paid to re-write this page? Click here to earn a reward.

Copyright © (Digital Fingerprint: 0d38c6720f0d78a701b74d58653af608)

About the author

Phillip Parker

Phillip Parker is a former merchant services agent turned small business advocate and the author of "Fee Sweep," which teaches merchants how to dramatically lower their processing rates, eliminate junk fees, and avoid fine-print scams. He founded to help merchants enact positive change in the credit card processing industry.

Phillip can help you find an ethical and honest processor that will offer you great rates. Click here to request a free provider consultation.

Permanent link to this article:


Skip to comment form

  1. Cynthia Ingram

    My contract with my merchant processing company just expired ( praise God), but I have another year to go with the equipment lease contract that was tied to the processor’s agreement (Lease finance group) who quoted me $1,500 ETF. Do the same techniques work for getting out of a contract with Equipment such as state limits on eft fees , etc.?

    1. Phillip Parker

      Cynthia, I can’t guarantee that the techniques will work, but I recommend checking with your Secretary of State. If the ETF is illegal in your state you should be able to get out of it.


    Was told by a walk in salesman that he would save me money and there would not be any interchange fees.
    Yes I did sign some paperwork which he faxed after he was going back and forth getting rates with someone on the phone. In the end I have not received a copy of any type of contract? I am being charged 220.00 per month rental fee for 4 years. So with this fee I am not saving any money. I tried to contact this company thru email and phone right after I felt I was taken for a ride.Less than a week. All I get is a run around,there is no one to communicate with. Even the BBB did not get any response from this company. So I cannot even try to get out of this one.
    I am just a small business owner that likes people and trusted this salesman to save me some money He did leave his phone number which I called. He stated he quit this job,but would call his old boss to help me out.It never happened.
    I have not given up,and will get out of this. In the end I think it might be best to stick with your business bank even if it cost a little bit more money.

  3. Stacey Jaudon

    Hi. I was diagnosed with two forms of cancer in December 2013 and was out of work for months. Having a solo private practice meant no income and no business done through Worldpay since I was not seeing clients. After having a second surgery, it became clear to me that I wanted/needed to close my practice so I called a rep with Worldpay asking to close my account of over three years. I was told that I needed to have notified them during a renewal period which was already passed, and would either need to wait until next years renewal window or pay $500 for early termination. My contract had nothing about renewal periods or ETF–what it had was one tiny printed line saying I agreed to basically anything Worldpay required/or instituted without them informing me. Gee whiz I feel stupid, taken advantage of, and really angry. I even explained that I had been diagnosed with a deadly cancer which after all treatment left me unable to continue to practice. I got nothing from the rep but those two options–plus the renewal time window has weird requirements around the dates making the whole process such an ugly quagmire!

Page 3 of 3«123

View all comments

Leave a Reply

Your email address will not be published. Required fields are marked *