Pivotal Payments’ $3,900 Cancellation Fee & Auto-Renewing Contract

• $3,900 cancellation fee
• Three-year auto-renewing contract term
• Liquidated Damages
• Additional Resources

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There's a reason why we scrutinize each processor before we invite them to participate in CardFellow's marketplace. We look at reputation, sales tactics, customer complaints, and more. We even make each processor sign a legal agreement forbidding cancellation fees, requiring interchange plus pricing, as well as a host of various other stipulations to safeguard businesses that use our service.

A recent interaction with Pivotal Payments comes as a stern reminder why we're so thorough, and why businesses need a service like CardFellow. Our safeguards exist to keep companies like Pivotal Payments out of our marketplace.

Just a few weeks ago, we helped Tom save quite a bit on his business's credit card processing fees. Unsure of exactly just how much he could save, Tom sent statements from his current processor (Pivotal Payments) for us to take a look at.

After completing our free comparative analysis, we showed Tom that he would save about 31% with the best offer he received through CardFellow. The reason for the great savings was that Pivotal Payments was charging high fees on a tiered pricing model.

Per our recommendation, Tom accepted the best quote for his business and the new processor got him up and running quickly with no problems.

It turns out that Tom wanted to make sure things were going to work out as expected with his new processor before he closed his existing merchant account. So, when he received his first statement from the processor he found through CardFellow, he was happy to see that the actual savings shown were greater than the 31% we had estimated. (We overestimate base costs in order to underestimate savings when doing comparative analyses so that we don't promise more savings than are actually realized.)

Pivotal Payments charges a $3,900 cancellation fee.

Here's where the problems started. When Tom called Pivotal Payments to cancel his old account, he was told that he still had two years left on his merchant account contract, and the cancellation fee would be $3,900.

Pivotal Payments uses three-year auto-renewing contract terms.

Since his merchant account was seven years old, Tom figured that any term had expired. Unfortunately, Pivotal Payments has an auto-renew clause in their agreement. The contract term renews every three years, indefinitely. Tom was only given a thirty-day window every three years to cancel the agreement.

When Tom called us to explain the situation, I told him that I would contact Pivotal Payments to see if there was anything that could be done. Unfortunately, termination fees are not something that processors let go easily.

I spent over an hour on the phone with Pivotal Payments, but it was clear that they had no interest in waiving their $3,900 cancellation fee.

Even though we weren't able to get Tom's cancellation fee dropped, Pivotal Payments did say that they would lower the fee to $400 if they couldn't match the offer that Tom received through CardFellow. So, the ordeal with Pivotal Payments is still unraveling.

Our goal here at CardFellow is to help businesses find the best credit card processing service, and we'll go the extra mile even if businesses are forced to stay with their current processor. We're not done yet, though, and we're keeping a close eye on Tom's situation with Pivotal Payments to help where we can.

Even if Tom ends up stuck with Pivotal Payments, we've offered him our free monitoring service to ensure Pivotal Payments sticks to their promise to match the rates he received through CardFellow.

Liquidated Damages

The reason Pivotal Payments was able to charge this business such a high cancellation is because it has a liquidated damages clause in its merchant processing agreement. A cancellation fee based on liquidated damages is determined by lost profit instead of a flat charge. For example, if a processor is making $300 a month on a business's processing volume, and the business cancels its processing agreement ten months before the terms expires, the business will owe the processor $3,000 based on liquidated damages.

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Here are some additional resources on Pivotal Payments that you may find helpful:

• MerchantMaverick's Review - MerchantMaverick does a great job of reviewing processors, but given our experience, we were surprised to see that Pivotal Payments was able to acheive 2.5 stars.
• CardPaymentOptions - Over 50 unhappy people commented on Pivotal Payments at CardPaymentOptions.
• Ripoff Report - Ripoff Report doesn't verify their posts, so we don't usually take too much stock in their content. However, it's tough to ignore Pivotal Payments' 39 fraud reports.
• BBB - It comes as no surprise that Pivotal Payments is not accredited by the Better Business Bureau.