Nowadays, the terms and conditions in your integrated payments contract differ from processor to processor. Some things will be common among several contracts, but here are some "gotchas" to be aware of when selecting the best integrated payments processor for your business.
One crucial provision to pay attention to in these contracts is the Term. The Term Provision, illustrated below as an example, highlights a common and concerning practice among processors. It involves a three-year term with an auto-renewal clause:
What's truly alarming is that you might find yourself locked in with this processor for three years. Even more concerning, these contracts are sometimes referred to as "evergreen," meaning that if you fail to terminate within the specified timeframe, you will automatically be renewed for another three-year term.
Be cautious of the 90-day renewal period. It states that you must provide notice at least 90 days before the initial term expires; otherwise, you will be automatically renewed for another three years.
Indemnification is a crucial provision found in every merchant contract, but it's important to tread carefully as these provisions are often taken advantage of. The key is to look for a mutual indemnification clause that protects both parties involved. If that's not possible, seek out a clause that shields you from liability for circumstances beyond your control. Take the time to compare contracts and carefully examine the indemnification provisions to determine their fairness and reasonableness.
When reviewing your contract, it is crucial to carefully evaluate the termination clause and its potential implications. Look for a provision that grants you the power to terminate the agreement in the event of price hikes. Furthermore, it is advantageous to have the freedom to terminate the contract for any reason without being subjected to early termination fees. Price increases are common in the processing industry, and some may be specific to the processor you are working with. Thus, having a clause that allows you to terminate the contract if prices are raised can be extremely advantageous for your business.
It is advisable to steer clear of processors that assert the right to terminate your agreement at any time and for any reason.
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