- On March 5, 2019
Though it may be tempting to enter into a merchant services contract, it is not recommended. There are many reasons why you should choose to avoid doing so. Your payment processing is crucial to the success of your business. Don’t sabotage that by agreeing to a contract that will hurt it.
In the business world, the way in which payments are processed often has to be changed. This becomes impossible to do if you enter into a contract. Companies that process payments want businesses locked into a contract to earn more money. They do this by charging rates that will maximize their profits. However, at the same time they offer less than desirable levels of customer service.
When a contract locks you into a specific rate, your business will suffer. It doesn’t give you any room for necessary adjustments to your agreement with the merchant. The average merchant sales contract lasts three to five years. This means for that amount of time you may be paying more than you need, resulting in monetary losses.
Since you can’t legally end the agreement for a certain amount of time, you will have to accept whatever level of customer service is offered to you. This can have a negative effect on your own customers. If there are issues with payment processing, customers may spend their money elsewhere instead.
A successful business must constantly evolve. This can be difficult or even impossible to do if you enter into a merchant services contract. As a result, your business will be stifled and won’t be able to grow.
Speaking in financial terms, a contract can cost more money than you realize. In most cases, signing a contract means agreeing to pay a percentage of each transaction to the merchant. While this may be feasible in the early days of a business, in the long run it could cost thousands of unnecessary dollars.
For these reasons, it is always best to avoid signing a contract. By doing so, you may be sealing the fate of your business. Being smart about the merchants you work with is crucial to success.