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Trapped in an agreement with a credit card processor?

Nearly all Canadian credit card processors still have three to five-year agreements with early termination fees ranging from $250 to over $5,000. Many also have auto-renew agreements, making it difficult to ever switch processors. Fortunately, Canadian merchants do have some tools available to getting out of their contracts early.

Leveraging your Relationship with Your Bank

Most merchants were referred by their credit card processor through their banks. Most processors are either bank-owned or have a profit-sharing agreement with the bank. For example, Moneris is jointly owned by RBC and BMO and most merchants using Moneris will be banking with those entities.

Don't be afraid to contact your bank rep and use your existing banking relationship as leverage - request that they waive the early termination fee or lose your banking business altogether. It's surprising how effective this method can be! Banks see credit card processing as a value-added service that helps them increased profits but in the end, they often value your banking business more.

Don't Allow Another Payment Processor to Pay the Cancellation Fee from Your Current Processor!

When you want to switch processors, allowing the new processor to pay the cancellation fee from the old processor may sound like a good idea. However, there truly is no free lunch! If a processor is willing to pay your cancellation fee, that processor is going to recoup the cost in the form of setup fees, application fees, high processing rates, lease agreements, and other hidden fees. Don't go from one negative payment processing relationship to another. 

Watch Out for Equipment Lease Agreements

Unfortunately, equipment lease agreements often fall outside of the Code of Conduct and are most often tied to a non-cancelable personal guarantee. It can be very difficult to end a lease agreement. Instead, contact the leasing company (usually a third-party) and inquiry about lease buy-out options. Most leased terminals are also unlocked, and can often be reprogrammed by your new processor. We offer credit card machine rental (within Canada), so you don't have to worry about a costly terminal buyout or long-term contract.

The Canadian Code of Conduct

The original Code of Conduct came into effect in August 2010 and was designed to dampen some of the practices of the credit card industry. Every few years it is updated to further help consumers and merchants based on changes in the industry.

Rate Increase or New Card Introduction

No fees can be increased or introduced by your processor without a 90-day notice, usually displayed on your statement. When a fee increase is announced, the merchant is allowed to cancel their account without penalty; up to 90-days prior and after the rate-change takes place. Visa and Mastercard also periodically introduce new credit card types (such as the new Visa Infinite Privilege card introduced April 2014). These new cards are considered new ‘fees' under the code of conduct.

NEW: Limitations on Auto-Renew Agreements

The latest Code of Conduct addresses Auto-Renew Agreements. Merchants can at any point provide notice to their processor that they do not which to auto-renew their agreement. They are not required to do this during a certain window (such as 30 days prior to the termination date). Auto-renew agreements have also been limited to a maximum of a 6-month term, meaning that even if you forget to notify them, they cannot renew your contract for another 3 years.

NEW: Reduction in Applicable Interchange Rates

Visa and MasterCard both introduced lower interchange rates in April 2015. Under the updated code of conduct, merchants are able to immediately cancel their existing agreement if the reduced interchange cost is not passed on in full back to the merchant. Since most Canadian merchants are in a tiered (qualified / non-qualified) price structure, very often price reductions do not fully reflect the lower interchange costs.

Filling a Complaint with the Code of Conduct

When calling your processor to cancel, oftentimes support reps will be unaware of the Code of Conduct or try and convince you that it does not apply. Be sure to have your call escalated to a manager. This is our first recommendation for the fastest and most immediate results. If this does not work and you feel that your processor is violating the code, you can file a complaint through the Financial Consumer Agency of Canada.

Telephone: 1-866-461-3222
Write to: Financial Consumer Agency of Canada
6th Floor, Enterprise Building
427 Laurier Ave. West
Ottawa, ON K1R 1B9

Filling a Compliant with Visa

Filing a compaint
Filing a compaint

We've always taken pride in being the only Canadian processor to display our complete pricing online. Now we can take pride in being one of the only providers in the country to offer certified merchant accounts with month-to-month pricing.