How struggling businesses should handle merchant accounts

How struggling businesses should handle merchant accounts

If the economy has taken its toll on your business, closing down a merchant account may be your next step. If your company is struggling to stay afloat in this turbulent economy, or you're facing the reality of shutting down operations, paying attention to all of your merchant accounts is critical during this time of change.

Banks and card issuers can impose severe fines and penalties on a merchant account that becomes past due. If your business is grappling with the effects of the credit crunch, it's more important than ever to review your terms and make sure you're meeting all payment demands from each account. Here are some important things to consider for handling your merchant account in this rough economy:

Keep paying any fees for service: Even if you're not using your credit card processing terminals or software, you're still responsible for paying any fees for services. Make sure you don't miss the payments on credit card processing terminal rentals or merchant account maintenance fees that you owe as part of your agreement. Some merchant account providers can impose heavy fees for late payments and may even shift your account to a delinquent status, which can affect your business credit report.

Find out what the termination fee is: You probably glossed over this information when you signed up for your merchant account, but when you're facing problems from the credit crunch, it's a good idea to review all contracts you signed and estimate the costs of closing down. The termination fee is usually listed in the contract you signed when setting up your merchant account. If you can't find it, give your account provider a call to confirm the figure.

Keep track of chargebacks: When you close your merchant account, you may still be responsible for paying fees and associated payments for any chargebacks by your customers. Make sure you have access to this data, and can make a timely payment to the credit card issuer. If you need help setting up a payment plan, call the company and get written documents that state your payment terms so you're not accumulating liabilities that you don't know about.

You need to be proactive during the credit crunch, assessing how much you will owe from this process, and maintain your part of the agreement, even when you're no longer in business. Set up a meeting with your account representative to discuss your situation and create a plan that will help you protect your credit history, and keep you in a good position to do business with the company, and other companies, in the future.

Published: June 4,2023