How to Cancel a Merchant Account: Here are the Steps and Tips to Follow

How to Cancel a Merchant Account: Here are the Steps and Tips to Follow

Your merchant account is the account where customer payments are deposited before they’re transferred to your small business bank account. It’s essentially the middleman between the customer’s bank and your business’s bank. And knowing how to cancel a merchant account is key to continued success.

Merchant accounts offer several benefits to small businesses making them a popular choice among merchants. So it shouldn’t come as a surprise that the merchant services industry is poised to grow by $38.83 billion at a CAGR of 9.35% between 2021 and 2025.

When you choose a merchant account provider or credit card processing solution, you probably sign a contract that agrees to specific terms of use. This might include fees, contract terms, and other stipulations and agreements from both parties. 

However, there are times when you need to end these contracts and cancel your merchant account. Though it should be easy, that’s certainly not always the case. 

Merchant account providers can be a tricky bunch, so we’ll show you how to cancel a merchant account successfully and move forward in your business. 

Why Cancel a Merchant Account?

There are a few reasons why you might want to cancel a merchant account, aside from going out of business entirely. Other motivations might include

  • You’ve sold your business and the new owner doesn’t want to or can’t use the same merchant account. 
  • You’ve recently acquired your business and want to change up some of the service providers and technology partners you work with. 
  • There’s a better merchant account with more favorable rates and service. 
  • You had a bad experience with your merchant account provider. 
  • Your merchant services provider recently raised their rates—e.g., payment processing fees, monthly fees, etc.  
  • Equipment leasing is too expensive. (We don’t lease equipment at Payment Depot.) 
  • Your business has outgrown your merchant account and you need something more scalable. 
  • They’re no longer compatible with your payment processor or other tools and providers. 

This is by no means an exhaustive list, but it gives you an idea of when it’s okay to walk away and look for an alternative. If your merchant account provider doesn’t suit your business needs anymore, it’s time to cancel. 

How to Cancel Your Merchant Account: 5 Tips for Getting Out of a Merchant Services Agreement

Seems like you should be able to simply log in and click “close my account”—but merchant account providers make businesses jump through a lot more hoops than that. Thus, there are specific steps you should take: 

1. Check your merchant account provider agreement and website

Refer to your user agreement and make sure you understand the cancellation policy as outlined there. This is the most official documentation you have. 

Next, head to your merchant account provider’s website. Search for their published cancellation policy and compare it to your user agreement. Note any discrepancies. 

Can’t find information about cancellation? Try this Google trick: Type “cancellation policy site:” and then type the URL of your merchant account provider’s website. Google will conduct a search for your query on that site only. 

How to Cancel a Merchant Account_Cancellation Policy_Body Image

Pro tip: Consult a lawyer

Merchant account contracts can be full of legalese. If you find yourself having trouble ironing out your agreement’s cancellation terms, it may be best to have a legal professional look over the agreement and instruct you on the best path forward. An attorney can offer advice on how to cancel your payment processing agreement, as well as what to say (or what not to say) to your payment processing provider.

Not only will this help you navigate the cancellation process, but it will give you the confidence you need when heading into a discussion with the payment processing company.

2. Give your merchant account provider a call

Armed with your information, it’s time to call your merchant account provider directly and inquire about the cancellation policy so you can validate what you know. Remember to write down all pertinent information to the call, including the representative’s name and ID number (if available), reference number, date and time of call, and any information given to you. 

Ask about the process for cancelling your account. They should be able to detail exactly what you need to do. 

3. Send an official merchant account cancellation letter [samples below]

Even if it’s not a requirement, it’s a good idea to write an official cancellation letter and send it via certified letter. This due diligence ensures you have a paper trail of the cancellation. 

Some merchant account providers have a sample merchant account cancellation letter and template on their site. Try the Google search trick to find it and ask about it when you call. Here’s a template you can use as a base: 

Merchant account cancellation letter sample 

TO:                                                                                                                             DATE

Merchant account provider name

Merchant account provider address

Merchant account provider phone and fax numbers


Your name

Your business name

Your business address

Your business phone and fax numbers

Your merchant ID number

Dear [NAME],

This letter serves as the official notice of the cancellation of the merchant account and all associated services for [BUSINESS NAME] with merchant ID number ####. The cancellation is to be effective as of [DATE]. Thank you for your attention in this matter. 


Your name

Your signature

Your title, business name

4. Return any necessary equipment

If you leased a terminal or any other hardware (e.g., card readers, POS systems, etc.), you’ll need to return it to the merchant account provider. Ask about the equipment return process when you call them, and write down any addresses needed for mailing or drop-off. 

It’s a good idea to take pictures of the equipment and document any damages so you’re not held responsible for anything you shouldn’t be. 

5. Get confirmations for everything

If the merchant account provider hasn’t done so proactively, request confirmations of receipt for your cancellation request, letter, and equipment. Date and record everything along the way. 

Tips for Cancelling Your Merchant Account

Sure, the process outlined above sounds relatively easy. But don’t be fooled. Merchant account providers are trained to try and keep your business, not necessarily to make the cancellation process easy. 

Be firm with your cancellation request and why you’re cancelling, and don’t let them talk you into something you don’t want or need for your business. 

Watch out for fees

You might have noted early termination fees (ETF) in your contract. Watch out for these and other cancellation fees your merchant account provider will try to charge. 

And remember this: Everything is negotiable. 

If there’s an ETF written into your contract, ask them to remove or lower it when you call to cancel. A bit of kindness can go a long way, so be patient with the representatives you’re dealing with. 

No luck? Examine your recent merchant account statements. Have any new fees slipped in? Have any existing ones been increased? This could be your loophole. Some governments require merchant account providers to waive the ETF in these scenarios, and it’s also written into some contracts. Again: document everything. 

In addition to an ETF, your merchant processing provider may also levy the following fees when you cancel your account:

Cancellation fee. Some payment processing providers charge a cancellation fee on top of your early termination costs. This is the case with First Data, whose contract stipulates that you must pay a cancellation fee if you terminate your account outside of certain cancellation windows. 

At Payment Depot, we don’t believe in cancellation fees. And neither should you. 

Equipment fees. If you got your equipment from your merchant services provider, they may also charge additional fees upon cancellation. Such fees include hardware restocking costs, equipment lease early termination fees, and more. 

Check in post-cancellation

Just because you’ve cancelled your account doesn’t mean the merchant account provider won’t try and sneak in more hidden fees. Some might even have an “accounting error” and accidentally charge you as though you hadn’t cancelled your account. It’s important to keep an eye on your business bank accounts and look out for unauthorized or unexpected charges from your former provider. 

If you can, close the bank account associated with your merchant account entirely. Then you won’t run the risk of them having access to your funds. 

Moving Forward with Your Merchant Account

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One door closes, and another opens. Choosing the right merchant account provider is essential to safeguarding your business and your profit. 

If you’re looking for a new provider and need help deciding which is best, get in touch with the Payment Depot team. We’ll run a free analysis of your statement or proposal to help you figure out the best fit for your business.

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