Merchant Data Systems Review

Merchant Data Systems Customer Service

Approximately 10 Merchant Data Systems negative reviews have been registered on this and other consumer protection sites, some of which are old enough so as not to be of too much concern. Issues include excessive cancellation fees, holds placed on large transactions, poor customer service, difficulty in canceling accounts, and fraudulent charges. Merchant Data Systems has made an effort to respond to most complaints listed and to resolve any pending issues, including, in one particular case, a refund of a cancellation fee. Merchant Data’s site offers a dedicated email address and 24/7 customer service phone line.

Note: We have adjusted this company’s BBB rating according to our own standards. To better understand why we adjust BBB ratings, please see our Rating Criteria.

Only One Complaint

Merchant Data Systems is an accredited business of the Better Business Bureau and currently maintains an “A+” rating with 1 complaint listed against the company, which was an issue with advertising or sales. The complaint either was resolved to the dissatisfaction of the merchant or did not receive a final response from the merchant.

What Merchants Say

Merchant Data Systems has also received 1 negative review to its BBB profile. The review describes an early termination fee and poor customer service:

Unethical contract terms and auto renewal that was never explained and never received the operating agreement. Stole $5400 from me Our small family run business has been with MDS since 2005. We had been happy with the service provided but in september of 2018, our company changed to a different point of sale software that integrated credit card processing into the sale. We no longer could use MDS, So i called to let them no i no longer needed their services. Fast foward to November and they just drafted $5400 out of my account. I called and spoke with *****, a supervisor, and he explained this was my early termination fee. Apparently back in 2014, my sales guy, *** **** was slick enough to slip in a piece of paper that in tiny print says that i have read and understand the 38 page MDS operating guide. *** never explained that there was any sort of 3 year contract and/or auto renewal. I’ve never even seen the “operating guide”. The only forms i was given via email was an application. So of course i signed what i perceived to be an application. When I called to cancel, the lady on the phone never mentioned anything about a termination fee. In my opinion, this is an unfair business practice. Clearly from reading other BBB and GOOGLE reviews…I am not alone in this thinking. Its a reminder that good will and common sense no longer prevail in our marketplace. I’m extremely discouraged and disappointed in ***** and my sales guy *** **** for knowingly deceiving myself and others like me.

This merchant would be better served by one of our top-rated processors.

A “B” Score

In light of these figures, we have adjusted the BBB’s rating to a “B.”

Merchant Data Systems Contract

The standard Merchant Data Systems contract (available below) outlines a three-year term that automatically renews for another three years. On other consumer protection sites, some complaints have also reported $10 statement fees and annual fees (possibly PCI Compliance fees) of $99. These totals are consistent with industry averages.

If canceled within three years, the contract charges a Liquidated Damages-style early termination fee. Specifically, the contract states the following with regard to its cancellation process:

If this Agreement is terminated by either party for any reason before the end of the then-current term, or if you or any of your Affiliates violate Section 17 hereof, you will immediately pay us, as a termination fee, the greater of (i) $250.00 for each year remaining in the then-current term or (ii) the fees (net of Association charges) we would have received based on the average monthly transaction volume during the highest 12-month period prior to termination (annualized in the event such period is less than 12 months) (or the fee we should have received, based on your representations in the Application, if greater) during the months remaining in the then-current term but for such termination.

An Expensive Option

In our opinion, this is an excessively complicated early termination fee that bears no relationship to the actual costs generated by a merchant’s cancellation. It therefore has the potential to be far more expensive than industry averages. Merchant Data’s use of independent sales agents might result in some variance among contracts, so merchants are encouraged to ask their sales agents which terms are negotiable and which are not. It is likely that each Merchant Data sales agent is cleared to alter the provisions of the standard contract to a certain extent. See the Merchant Data Systems Merchant Agreement.

Merchant Data Systems rated as an average merchant account provider according to our criteria. The company has a lower-than-average number of complaints for its size and time in business, but several complaints about unreliable sales agents indicate that the company could stand to better train and regulate its sales force. Its standard contract also appears to include an excessively harsh early termination penalty. However, it appears to be closed. Merchants are advised to do business with agents they trust and to carefully examine all contract terms.