Contracts between payment processors and merchants usually include cancellation and termination fees, but processors rarely collect them, observers say. "Most of the time, if a company goes out of business, we're really not going to add insult to injury," Jon Perry, managing partner of Ft. Worth, Texas-based independent sales organization 888QuikRate.com, tells CardLine sister publication ISO&Agent Weekly. Cancellation or termination fees range from $100 to $500, according to John Priore, president and CEO of Alpharetta, Ga.-based processor Priority Payment Systems LLC. Collecting a fee often is not worth the time and effort, and some merchants do everything they can to avoid paying, Priore says. "I would say less than 20% of the time you are actually able to collect the fee," he says. "Most of the time merchants will change bank accounts, or they'll inform their bank not to accept any debits from a particular company." Though cancellation and termination fees may seem a useless contract provision, they force merchants to think twice about leaving a processor without giving notice, industry executives say. "The termination fee is what you hope to be the basis of a phone call to your call center with someone asking what the options are if they are considering leaving," Priore says. "And at that point you hope to save the account."

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