Tag: Credit Card Processing

So you have a contract with First Data/Fiserv, and you want to cancel it.

Maybe it’s because you think you’re paying too much in processing fees (you probably are). Maybe it’s because you’ve had enough of their bad customer service and are tired of dealing with their corporate bureaucracy (we hear horror stories). Or maybe it’s something completely different. Whatever your reason might be, you want out of this business relationship.

You may already have tried reading through your contract with First Data and found yourself drowning in 20+ pages of small writing, all in dense legalese, and you still don’t know how to cancel. Is there a shortcut?

Yes! And no.

In this article, we’ll explain how the cancellation process typically works. You’ll still have to read some of that contract, but we’ll help you find the relevant parts more quickly for quick lookups. After that, hopefully, you can cancel the contract without issues.

So let’s get started.

The Trouble With First Data Contract Cancellation

A First Data contract can be hard to cancel right away. The main problem is that it has an early termination fee (ETF), which could get pretty hefty if you cancel at the wrong time. To pay less of the ETF, you might have to wait a few months. But there are other obstacles as well.

First Data Customer Service Usually Holds You To The Letter Of The Contract

If you make a mistake while cancelling, it could get expensive.

For instance, during the course of writing this article, we looked through customer complaints both on our website and the Better Business Bureau site. Generally, the First Data customer service department is portrayed as unfriendly and unsympathetic, and holding you to the letter of the contract. One customer service representative even told a merchant that “It may be beneficial that you educate yourself on the MPA [Merchant Processing Agreement].” Even when they do authorize a cancellation-related refund, it might not be for the full amount they took from you.

As to the contract itself, it’s usually in dense legalese. This is not a commercial contract for beginners. To fully understand it, you’ll need to read — and comprehend — a few sections located in different parts of the contract before you truly understand how these sections work together. Even if you do read the contract, you might not fully understand the implications of each section. All this can lead to expensive mistakes.

The Contract Has A Strictly Defined Cancellation Procedure & Sometimes Narrow Cancellation Widows

The contract itself uses various ways to discourage cancellation. In addition to the ETF, to successfully cancel the contract, you must follow a strict termination procedure, avoid the automatic renewal mechanism, and pay a cancellation fee (which is different from the ETF). While there might be a narrow 30-day window to cancel when First Data increases its own processing prices, it is tricky to take advantage of those opportunities. Most of the time, the safest way to cancel is to follow procedure and cancel at the end of a term.

There Are Related Contracts That Have Longer Terms & Are Not Cancellable

To complicate matters, usually, there are several related contracts attached to the primary contract. One of them is an equipment lease contract. This part of the contract applies to you only if you signed up to lease equipment from First Data. The gotcha, though, is that the length of the lease might be different from the length of the main contract.

Usually, the lease is for 48 months and is not cancellable. The only way to get out of the lease early is to pay all the money due under the lease in one lump sum. If your main contract has a term shorter than 48 months, you might be stuck with an equipment lease contract even after you’ve successfully canceled your main contract.

Maybe you only signed the equipment lease because you liked the Clover equipment. We agree that the Clover line of hardware and software (Clover POS, Clover Go, and Clover Flex) is pretty nice. The trouble is, Clover is proprietary to First Data, so you can’t use it with another processor. If you cancel your First Data contract and wish to continue to use the Clover equipment and software, you might have limited choices on where you can go; ultimately, you’ll have to connect in the backend to First Data. (Fortunately, there is a solution to this problem, and we will discuss it later in this article.)

As to the other related contracts, the agreements we looked through allow First Data to cancel at will. If you wish to cancel, however, you typically have to use the main contract’s cancellation mechanism. There might be additional procedures in these sections that you must follow as well. Because your version of the contract might be different from the versions we were able to find, always double-check your version to understand your own obligations.

Even After You Successfully Cancel, You Might Still Not Be Done

Lastly, in our quick review of customer complaints, a merchant is sometimes not aware that they will have to return the leased hardware after the hardware agreement is cancelled, or they’ll continue to be billed for the equipment lease. Some merchants fail to understand this; others attempt to return the hardware but the equipment gets lost in the mail system somewhere on its way. All this can result in additional charges, which the First Data customer service department apparently holds you to.

Now that you have an idea of what you might be up against, let’s keep these possible issues in mind and go through the specific steps to cancel the First Data agreement while avoiding the issues above.

How To Cancel Your First Data Merchant Account In 11 Steps

To write this article, we did a quick Internet search and grabbed some First Data agreements from the First Data website. However, there are no direct links to these agreements from the First Data home page or menus, so, while we know the agreements are from First Data, we do not know under what circumstances First Data passes the agreements out, to whom, or how current they are.

From the file names, we do know that these agreements are tweaked to fit the needs of specific regions of the world. For instance, we found a version that seems to be for independent salespersons in the US. There’s a version for Canada, a version for the UK (might be used for the entire European Union), and another version for the Asia Pacific region.

To write this article, we looked through all these agreements. This article is meant to give you a general sense of these agreements, so please be aware that we haven’t dissected each paragraph or sentence. You may also have signed an older or newer version of these agreements. So, if you have specific questions about your specific contract, please consult a lawyer to get the “real” answer for your situation.

As we already mentioned earlier, the most pain-free way to cancel the First Data agreement is to wait until the end of the contract’s term, so this is what we’ll focus on below. If you need to terminate your contract with First Data because you need to declare bankruptcy (e.g. because of the economic crisis from COVID-19), please be aware that termination due to bankruptcy will put you on the MATCH list, and you’ll have trouble setting up a new card processing account in the near future. Be sure to talk to your bankruptcy lawyer about this issue and see if he/she can think of a way to avoid the MATCH list.

Bearing the above in mind, here are the general steps to cancel a First Data Merchant Processing Agreement (MPA).

1. Find Your Merchant Agreement

You should have a copy of your MPA. It might be in paper form, or it might be in electronic form. You might have to go through old emails. If you can’t find it, you might have to contact First Data for a copy. Likely, you’ll need your MID for them to be able to pull your contract, so be sure to have it at hand when you call. You should be able to find your MID in your statement.

You absolutely can’t skip this step. Each contract has specific details that tell you when you can terminate your contract without penalty. If you try to cancel your agreement without looking up these specific details, you might be hit with a big payment on something completely avoidable.

2. Find The Effective Date

Finding the Effective Date is very important because this is the date when the clock starts ticking towards the end of the term of the contract. Usually, the contract will define/tell you how to find the Effective Date—it’ll either be in the first few paragraphs of an agreement, or it’ll be in a section called Term and Termination or similar.

With First Data, the Effective Date is typically the date they approved the agreement, but this varies by region, so be sure to double-check by looking at your agreement. If you’re in the US or in Canada, you might have to look through your physical file or old emails from First Data (or its independent sales representative) for a letter telling you that you’ve been approved to do business with First Data in order to nail down the exact date.

3. Find The Initial Term & Calculate The End Date Of The Initial Term

In the same Term and Termination section, you should usually see how Initial Term is defined. Sometimes, it points you to another section to look up the number. Other times, it’ll tell you an exact number starting from the Effective Date.

For the First Data agreements we looked at, the Initial Term might be something your salesperson fills out in your application (so you have to flip to your application form to check) or sometimes it’s specified as a part of the definition of Initial Term. The typical number we’ve seen is three to four years.

Once you have your Effective Date and the length of your Initial Term, you can calculate the end of the Initial Term.

4. If Necessary, Determine The Renewal Term

Once you have the Initial Term, then it’s easy to determine if you’re still in this initial term or you’re outside of it. If you’re still in the initial term, you can skip to the next step. If you’re outside the initial term, then continue to read below.

If you’re outside of the Initial Term, determine how long you’ve gone into your Renewal Term. Renewal Term should also be defined in this section (sometimes it’s in a section or two below the Initial Term section). Look for it. It should be easy to find.

For the agreements we looked at, the Renewal Term can be anywhere from month-to-month to up to six months at a time. You might also have an earlier version of the First Data agreement, where your Renewal Term is defined differently. Double-check the contract and determine the end of the particular Renewal Term you’re in.

5. Determine The Notice Period & Calculate The Exact Date By Which You Must Give Termination Notice

In the same Term and Termination section, you should also be able to find exactly how First Data wants to receive a notice of termination. For contracts in general (with any company and not only with First Data), the notice usually must be in writing. Typically, the contract will also spell out how many days in advance of termination they have to receive the notice. With First Data, typically this is 30 to 60 days in advance, but you should always check to make sure the number of days specific to your agreement. With month-to-month agreements, the notice period is typically 30 days.

Usually, companies want to have the notice in their hands by the notice date, so if your notice deadline is 30 days, don’t send the notice out on the 30th day. Send it out so that they get the notice at least a few days before the deadline.

6. Go To The Notice Section & Find The Form & Format You Must Use To Give Notice

Now that you know by which date you must inform First Data that you’re terminating the contract, go to the Notice section in the contract to lookup more specifics. This section is usually lumped with all the miscellaneous legal boilerplate language.

In the Notice section, you will learn how you have to give notice. Typically, your notice must be in writing and must be sent to a specific address by some specific delivery method—e.g., by mail, by courier, by fax. Follow that section to the letter. Given how strictly First Data holds its customers to the contract, you’ll want to follow this section exactly.

7. Calendar That Date

Now you know the deadline date by which First Data must receive your notice of termination, where to send the notice, and how you have to send it. If that date is several months away, you might want to put the deadline on your calendar so you don’t forget. Note again that the deadline is typically the date by which First Data receives the notice, and not the date on which you send the notice.

Fortunately, you’re free to send your notice any time earlier than the deadline date. However, common sense says you might not get the best service from a company that you have told you no longer wish to do business with, so you might want to hold off sending the notice of termination until just a few weeks before the deadline.

8. Note If There Are Cancellation-Related Fees Such As The Early Termination Fee & The Cancellation Fee

If you terminate your First Data agreement by finding the end date of your Initial Term or Renewal Term and by following the procedure above, you shouldn’t have to pay an ETF. Of course, if you don’t mind paying an ETF, then you can terminate any time by providing First Data with a written notice, following the procedure in Step 6 above.

If you’re thinking of paying the ETF, read through that section carefully so you understand how much you’d have to pay if you terminate early. This could get expensive, so think it through carefully before you do it.

Note that, when you cancel your agreement, First Data will also charge you a Cancellation Fee. The Cancellation Fee is separate from the ETF, and usually it’s a flat fee. Be prepared to pay this cost.

9. When The Time Comes, Send the Notice of Termination

This is a pretty self-explanatory step, but an important one. Send the notice of termination. Don’t put it off. Given how First Data customer service is described on the BBB complaint site, they’ll show you no sympathy if you don’t get this done correctly. Do it early and do it right.

Another thing to remember about the notice is that you should be very specific about the date on which you want to terminate service. Make sure there is no ambiguity on the last date of service, so First Data can’t extend the contract for longer than you wish or even mistakenly terminate the contract early and charge you an ETF.

Whether you send your notice by your country’s mail system or by private courier (e.g. FedEx, UPS, DHL), be sure to request a signed receipt so that you have proof First Data did get your notice and on what date. Too often, people claim they never got a piece of important correspondence, so your return receipt will come in handy to prove that you sent your notice of termination by the notice deadline and to the correct address.

10. Return Equipment If Called For By Equipment Lease

If you leased equipment from First Data, be sure to check all the termination language in that section of the contract. An equipment lease is typically not cancellable during the initial lease term (which is typically 48 months). You could cancel afterward, but there are specific steps involved, and maybe even a separate notice procedure. One of the most important things is that you might have to return the equipment, or pay for it outright (yes, you’d have to pay for the equipment that you’ve already paid for several times over during the initial term of the lease, which is why we hate leasing).

When you return the equipment, be sure to request a delivery receipt. This way, First Data can’t claim that they never received the equipment or that somehow it got lost in transit.

11. Keep An Eye Out For Unauthorized Withdrawals & Dispute If Necessary

Lastly, don’t trust that First Data will close your account correctly. Once you get the delivery receipt of your notice letter, look for something from First Data acknowledging the contract termination. If you don’t get anything, call to follow up.

Keep watching your bank account to make sure they stop taking charges from your account. They might have to withdraw some processing fees from the last day your account was active, and things like chargebacks might happen months after the termination. But if you have any questions, call and talk to them to make sure they’re not withdrawing money that they’re not entitled to. It’s your money, so you need to be responsible for catching their mistakes.

How To Find Alternatives To First Data Merchant Services

Before you completely terminate your business relationship with First Data, we hope that you’re already thinking of which payment processor you’re going to use next. After all, payment processors are a necessity! It’s nearly impossible to do business these days if you can’t accept credit or debit cards.

Fortunately, there are a lot of reputable providers out there, and we can help you find the one that makes sense for you. We recommend you start your research with this Best Of list (here’s one for high-risk businesses as well) and go on from there.

Can You Reuse Your Existing Clover Equipment?

As mentioned above, Clover hardware and software are proprietary to First Data, so you can’t use them unless, somehow, they’re connected to First Data in the backend. This means that if you have Clover equipment and wish to continue to use it, you’ll have to find a processor who does business with First Data. One way to look for such a processor is to investigate whether they sell Clover equipment. If they do, then it’s almost certain that they do business with First Data.

But if you couldn’t get a great deal with First Data by signing with it directly, what hope do you have for a great deal if you go through a middleman? While we don’t know how the business relationship between First Data and its front-end processors truly works, from what we have observed (and from the types of offers advertised on some of these processors’ websites), some front-end processors may indeed have a better deal with First Data than any individual merchant working with First Data directly could ever get.

This makes sense, actually. Front-end processors can promise a certain volume of business to First Data. These processors can also provide their own customer support, so First Data doesn’t have to spend time or resources dealing with these issues. In any event and whatever happened behind the scenes, some of these processors—including our highly-rated ones like National Processing, Payment Depot, and Dharma—can even offer month-to-month contracts and no ETF when you sign up with them. These processors also let you buy the Clover equipment outright, without a cumbersome and ultimately expensive equipment lease. It often makes more sense to work with First Data through a middleman than dealing with it directly.

Are Offers Of Early Termination Fee Reimbursement Too Good To Be True?

We sometimes come across processors that promise to buy out your ETF so you can terminate your existing merchant agreement early and sign up with them. Be careful with these promises. Sometimes, there’s a hard cap on how much they’ll pay, so be sure to first understand the amount they’re willing to pony up before you cancel with First Data. Keep in mind as well that signing with them might mean signing another long term contract that’s difficult to terminate—a contract that has its own ETF.

Be wary of any offer to buy out your ETF, in short. While sometimes the offer is real, other times you might be jumping out of the proverbial frying pan and into the fire. Get all the facts and do your math before you make a final decision.

Cancelling Your First Data Merchant Account Isn’t Easy, But It Is Doable

First Data is a large multinational company, and it’s one of the most “corporate” processors we’ve come across. It is, therefore, fitting that they’d have a very formal contract full of gotchas that newer business owners aren’t used to dealing with. While early termination penalties, strict termination procedures, and precise notice requirements aren’t unusual when large businesses work with one another, they can be shocking to a small business owner who just isn’t used to business-to-business style contracts. (If you wish to learn more about how to read merchant agreements, check out our guide on merchant agreements.)

But every contract can be cancelled, and the First Data contract is no exception. You will have to read the contract very carefully to find out the exact procedure and then you might have to wait a few months, but when the timing is right and you follow the procedure strictly, terminating the contract is actually fairly easy. So don’t be intimidated. If you have specific questions about your contract, it’s best for you to consult a lawyer, but if you have stories about contract cancellation with First Data, we’d love to hear about them. Just leave us a note below!