What is an early termination fee?

At a glance

How it works

Most processing agreements have a first term, then renew in shorter terms. If you leave before the term ends, the contract may charge a fee. The Code says fixed-term agreements cannot renew automatically for the full first term. They may turn into extensions of six months or less. You can give notice of non-renewal up to 45 calendar days before the agreement renews.

1. Find your contract and read the term, the renewal date and the fee.
2. Check whether you are inside a penalty-free window, such as 70 days after a fee increase.
3. Send written notice by the method your contract names, and keep a copy.
4. Return rented equipment on time, and ask for a final statement.

A Canadian example

A two-location café group in Laval takes under $5,000,000 a year in card sales. Moneris's published terms charge a $300 deactivation fee for each location when the agreement ends. Two locations cost $600. Fiserv Canada's published terms charge $500 per location plus the fees on your Form. That applies to merchants at or under $5,000,000 a year. The same two locations cost $1,000 plus those fees. This is an example only, not a quote. Read your own agreement, because the fee on your Form may differ.

What is different in Canada and Québec

• Little differs between Québec and the rest of Canada. The Code of Conduct for the Payment Card Industry in Canada applies nationwide. It has been in force since 30 October 2024.
• You must get between 30 and 60 calendar days' notice of a fee increase or a new fee. You may then cancel without penalty within 70 calendar days after the effective date.
• The Code says this right covers related service agreements as well. That can include a terminal lease brokered through your processor. A lease from a separate company may have its own terms, so read it.
• Once you give notice, your processor must send the cancellation paperwork within five business days.
• Moneris's agreement repeats the 70-day right. It adds that the cancellation date must be at least 30 calendar days after your notice. Both sides can agree to an earlier date.

What it costs and where it shows on your statement

The fee does not show on a monthly statement. It appears when you leave, on a final invoice, or in the fee schedule in your contract. Moneris's agreement says the merchant must pay a $300 deactivation fee for each location when the agreement ends. Fiserv Canada's terms say the fee is due within 15 days after you receive its calculation. They also say a $500 fee applies if equipment is not returned within 30 days of termination. Above $5,000,000 a year in card volume, Fiserv Canada uses a formula. It takes 80% of the average net monthly processing charge. It multiplies that by the months left in the term.

Where CleverPays fits in this step

Your processor writes the term and the fee, and the Code of Conduct sets the minimum rights. CleverPays does not set the Code, card network rules or another processor's fees. CleverPays is operated by Groupe Heo Inc., an Agent of Fiserv Canada Ltd. Our Clover cost guide says CleverPays terms run from no contract up to four years.

We can explain a fee. We can explain the Code rights that fit a notice you received. We can help you gather what you need. We can read a recent statement with you and show each fee line. We will walk you through the dates in your agreement and answer your questions in English and French. We cannot decide whether a fee is owed, because that depends on your contract.

Common mistakes

• Missing the notice date. Moneris's agreement renews in six-month terms unless you give notice at least 45 days before the term ends.
• Forgetting the equipment. A lease or rental can have its own end date and its own fee.
• Not saving fee notices. Your 70-day window starts on the effective date of the change. Keep the notice and note that date.

Related terms

• Code of Conduct for the Payment Card Industry in Canada: the rules that give you notice and exit rights.
• Merchant account: the account your contract sets up.
• Payment processor: the company whose contract carries the fee.
• Effective rate: the real cost of your processing, which helps you judge whether to leave.
• Equipment leasing: a rental or lease on a terminal, which may have its own end terms.
• Auto-renewal: when a contract renews on its own unless you give notice.

Common questions