5 simple tips for assessing your card processing contract
Signing a contract is a big deal in any industry and it's not something to be taken lightly. Given that you are making a firm commitment and establishing an ongoing relationship, it's important to be confident that you have chosen the right vendor to work with. As a financial institution focusing on revenue and cost reductions, you should be aware of the nuances within your contract. These 5 simple tips are beginning guidelines to help you navigate the waters of negotiation.
1. Conduct an annual review
Prior to a contract end date, there should be an annual review of contract terms as well as the program performance. This will likely be conducted by the legal team in conjunction with data analysts. Having a pulse check on your card issuing portfolio will help the team highlight where processes are going well and areas that need improvement. Knowing these numbers will also put you in a good position for negotiation when it's time to renew your contract.
2. Be aware of contract expiration dates
Renegotiating terms is done at contract renewal and you will want to be prepared. Those dates can sneak up on the team and you'll want to have the time to do some pre-work before meeting with your payment processor. It's best practice to conduct the annual review about 60 days prior to contract expiration. That gives each team time to pull the statistics to discuss with your payment partner. Be prepared to review team performance and where the terms of the contract should be updated.
3. Look for flexibility
Financial institutions are subject to regulatory changes that can come at a moment's notice. A card processing partner that understands industry regulations and is able to react to changes in real-time is imperative. When speaking with a potential card processing vendor, ask about how they are structured to handle regulatory changes.
4. Beware of auto-renewal
Look for fine print outlining the renewal terms. You will want to ensure your financial institution has the opportunity to renegotiate based on card portfolio performance. You should also use that time to discuss any needs surrounding customer service support and technology updates, and complete a pricing review.
5. Innovations in technology
Technology moves quickly in the payments landscape and your financial institution will want the opportunity to discuss new technologies as they become available. Keeping the lines of communication open throughout the contract is best practice, but contract renewal is a good time to remember to have a dialogue about technology. The success of your card processing portfolio will depend on keeping up with the latest innovations.
In the end, finding the right card processing vendor will allow your merchant services division room for growth.