Understanding Contract Auto-Renewal in Merchant Account Services
How Auto-Renewal Works
As your merchant account contract nears its end, you might be exploring better deals from other providers. Payment processing technology, pricing, and service offerings evolve rapidly, making it crucial to review your options. However, when you attempt to switch providers, you may find yourself unexpectedly locked into an additional contract term due to an auto-renewal clause—one you may not have noticed when you first signed up.
This is contract auto-renewal, and it costs UK businesses millions each year. To help you avoid this situation, here’s a step-by-step guide to staying in control of your merchant account contract.
How to Avoid Merchant Account Auto-Renewal
1. Read the Small Print
Many businesses overlook contract details, particularly the terms hidden in the fine print. Auto-renewal clauses are often buried within these terms and conditions, and failing to notice them can lead to unwanted contract extensions. Before signing any agreement, take the time to read it thoroughly. If possible, have your legal team review the contract to identify potential pitfalls.
2. Opt-Out of Auto-Renewal in Advance
If your contract includes an auto-renewal clause, the most effective way to prevent it from activating is to opt out as soon as possible. Many providers allow you to decline automatic renewal at the start of your contract. By handling this early, you eliminate the risk of forgetting about it when your contract term expires.
3. Know Your Account Manager
Establishing a relationship with your account manager is essential. When the time comes to cancel, knowing who to contact can save you from being passed around different departments. Your original sales representative is unlikely to be your go-to person for contract matters. Instead, keep a record of your account manager’s name, email address, and direct phone number for future reference.
4. Set a Reminder for Cancellation Deadlines
If you don’t opt out of auto-renewal immediately, set a reminder in your business calendar well before your contract’s cancellation deadline. This will give you enough time to prepare and submit your termination request before the notice period expires. Ideally, set up reminders for at least a week before your deadline to allow for any necessary follow-ups.
5. Submit Your Cancellation Request in Writing
Always provide your cancellation request in writing. This ensures you have documented proof in case of any disputes. An email is typically sufficient, but some providers may require a formal letter. Keep a copy of all correspondence and request written confirmation of contract termination from your provider.
6. Monitor Your Bank Statements
Even after submitting your cancellation request, continue monitoring your business bank statements for at least two to three months post-cancellation. Some providers may still charge fees in hopes that you won’t notice. Inform your finance team about the termination and instruct them to flag any unauthorised transactions.
7. Ensure Proper Closure of Your Old Merchant Account
Once you've switched to a new provider, formally close your previous merchant account to avoid lingering charges.
- Contact your provider directly – Call your old provider and ask for their official cancellation process.
- Request written confirmation– Obtain an email confirming that your account has been closed or is scheduled for closure. This will protect you from continued billing or unexpected fees.
How Merchant Advice Service and The Payments Directory® Can Help
Switching merchant account providers can feel overwhelming, but Merchant Advice Service and The Payments Directory® make the process seamless. Whether you’re unsure about contract terms, need help avoiding auto-renewals, or want to find the best deal for your business, our expert advisors offer unbiased guidance. We compare providers based on your business needs, ensuring you get the most competitive rates and the right payment solutions. With access to The Payments Directory®, you can explore trusted merchant account providers, read reviews, and make informed decisions with confidence. Let us take the stress out of switching and help you maximise your payment processing efficiency.
Switching Providers Without the Exit Fees
One of the biggest concerns businesses face when switching merchant account providers is the potential cost of exit fees. However, many leading merchant service providers offer to cover these fees to encourage businesses to move to them. This means you can upgrade to a better deal without worrying about expensive termination costs. Before making the switch, check with your new provider to see if they offer exit fee coverage and what conditions apply. At Merchant Advice Service, we can help you find providers that offer this benefit, ensuring a smooth and cost-effective transition to a better payment processing solution.
Wrapping It Up
By following these steps, you can stay in control of your merchant account contract and avoid unexpected renewals or fees. If you're considering switching providers, take proactive steps to manage your contract terms and ensure a smooth transition.
