11 Nov Thinking of Cancelling Your Payment Processing Account? Read This First
Cancelling a Processing Account: What You Should Know Before You Act
If you’ve decided to cancel your payment processing account (maybe due to high fees, poor service, or a better offer elsewhere) you’re not alone. But before you send that cancellation notice, it’s worth understanding what you might be walking into.
Cancelling isn’t always as simple as it sounds. In fact, doing it incorrectly can cost your business thousands.
- Know Your Cancellation Terms
Most merchant processing agreements include early termination or cancellation clauses, and the fees tied to them can be steep.
At Fee Advocates, we’ve seen businesses charged anywhere from a few hundred dollars to an eye-watering $17,000 simply for ending a contract early.
The key takeaway? These fees are often avoidable, but only if the cancellation is handled properly and documented correctly.
Many processors count on confusion or incomplete paperwork to trigger penalties.
- PAD Agreements Don’t Cancel Automatically
One of the most overlooked parts of ending a processing relationship is the Pre-Authorized Debit (PAD) agreement.
Even after your processing account is closed, the PAD authorization allowing the processor to withdraw funds from your bank often remains active. Unless you cancel it separately and in writing, the processor may continue to pull fees, adjustments, or “final reconciliations” from your account.
These PADs require specific wording and formal notice to be cancelled correctly. If not done properly, you could find charges appearing months after you believed everything was settled.
- Timing and Wording Matter
Each processor has its own required procedures and notice periods for cancellation. Sending a quick email or calling customer service rarely meets those requirements.
You may need:
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- A written termination request referencing the correct merchant ID and agreement number
- Specific language that clearly withdraws PAD authorization
- Confirmation of receipt and final settlement dates
Without the right process, you may still be considered “active,” allowing the processor to bill you for additional months, or apply cancellation fees retroactively.
- Avoiding Fees and Protecting Your Business
Handled correctly, most cancellation fees can be negotiated down or eliminated entirely. Fee Advocates regularly helps clients:
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- Review contract terms and identify loopholes
- Craft compliant cancellation letters
- Cancel PAD agreements properly
- Recover unauthorized withdrawals
What might look like a locked-in fee can often be challenged when you know the fine print, and the Code of Conduct that governs processors in Canada.
Don’t let frustration with high fees or poor service push you into a costly mistake. Cancelling a processing account can be done cleanly, but only if it’s done carefully.
If you’re considering switching providers or ending your merchant account, get a second opinion first. You might save more than you expect.
We can help you cancel the right way, and often avoid the fees completely.
Contact Fee Advocates for a complimentary review of your processing agreement before you make a move.