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July 10, 2024
by David Goodale

Don't Get Stuck in a Long-Term Credit Card Processing Contract!

(Slightly edited from video transcript for greater readability)

Key Takeaways

Monthly Contracts are Ideal
Opting for month-to-month contracts is the best approach for new merchants. This flexibility allows businesses to assess the service quality and fit without long-term commitments, avoiding potential issues with unsuitable processors.
Evaluate the Service Before Committing
Once you have used a processor for a while you can negotiate lower rates by agreeing to a longer-term contract. However, this should only be done after you've tried the processor and are happy with the service.
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Hello, David here at Today I'm going to speak about contract durations. How long of a contract should you be willing to sign for your business? This will be a quick one. Stay tuned. We'll dig in in one second.


Monthly Contracts are Ideal

Monthly, month-to-month contracts, that is how to go. Every merchant that I onboard, effectively begins on a month-to-month contract. If a payment processor tries to lock you into a fixed contract term, disagree. It is a mistake to agree If you haven't worked with that credit card processor before, there are some exceptions to this rule. Perhaps if you're a huge brand name company and you are doing a very detailed request for proposal for a large project, then maybe a month-to-month contract doesn't make sense. However, that is an exception to the rule. Now, I'm not against fixed-term contracts. You could have a contract of one or five years. That's all fine.

The reason that you don't want more than a month-to-month agreement is that you have not used and evaluated the service yet.

If you don't know that it's going to be a good fit for your business, why would you agree or commit to a contract for a long time? It is a dangerous thing and a lot of credit card processors, particularly years ago, almost all credit card processors had locked in contract terms. Thankfully that's changed, but there are still some that have a bare minimum one-year fixed contract term. You need to negotiate that away. You should say to them, if that was me and I was in a situation where for some reason I needed that processor, I'd say, give me 90 days. If they push, I'd possibly agree to 60 days. However, give me some amount of time to evaluate the service not from the date that I signed the contract. That's not helpful from the date that you process your first live transaction and that will give you some time to use the service and find out if it's okay.


When are longer term contracts beneficial?

When is it okay to sign a contract and how can it be a benefit for you? Well, this is quite easy. If I've worked with someone for six months or even a year. At, we're very close with our clients. I'm friends with quite a lot of my clients that I work with regularly. They know us, we know them. Everybody's happy. Maybe they want to beat me up on the rate a little bit. Sometimes they say: Dave, I feel like you could be doing a little bit better. I'll respond okay sure, but can you commit to a longer contract? Can we renew your contract for three years? They say yes, I'm not going anywhere. I like your service. I just want to get a little bit of savings.

As a negotiation tool, you give a little to the processor to get a little bit in return to negotiate that lower rate.

Not until you know the service, you know the people, you know the support. You know you're getting the rates that you expect. You know that technically it's meeting all your needs and that's how I feel about contract terms. We don't have to go on any further.


If you're thinking about getting credit card processing for your business, please do reach out to us at I'd love to give you a quote and answer any questions you have. Thanks for watching, and have a nice day there. Bye now.

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David Goodale About the Author

My name is David Goodale, CEO at Merchant I launched our business in 2001 and have over 20 years of expertise in the field of online payments. If you have a payments related question or project, and especially if it relates to multi-currency or international e-commerce don't hesitate to contact me. I'm always happy to help with an honest opinion, and enjoy chatting with folks from interesting businesses.

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