Commercial Law / Credit Card Processors / Service Agreements
Jaron Rice, Magothy Payments, PBA Member
The legislative bill that Delegate Seth Howard and I (along with his legislative team) have crafted is scheduled for committee hearings on March 14th.
The bill would make liquidated damages clauses illegal in the state of Maryland in regards to merchant services agreements, and cap a merchant's cancellation fee at $99. Currently, your average contract is a 3 year agreement with a $499 cancellation fee, and may include liquidated damages for all of the months left on the agreement.
Let's just say a business owner realizes he can save $400 a month by switching his credit card processing. Currently, he'll be penalized $499 + liquidated damages. If his liquidated damages clause states $150/mo and he's got 2 years left on his agreement, he'd end up paying $4099 to get out of his contract. I've seen fees as high as $300 PER MONTH for the remaining months on the agreement, causing a penalty of thousand and thousands of dollars.
This bill would promote integrity and competition in my industry so that business owners wouldn't be held hostage by their banks or merchant services providers and are free to shop around for better rates/programs. Remember, competition is good for everyone. I appreciate your support in this matter.