Payment Processors – Shift4 is really Shaft4?

The problem with the law is that it requires as acceptable evidence many things in writing.

We totally understand why this is – memories are fallible, victims can themselves be unethical, etc. – but if you spend any time in payments you’ll know exactly what we posit below is the gospel:

1. Merchants never read a contract. They’re borderline illiterate as best, and you could author a clause that has merchants waiving claims when you murder their families (which is ironically what payment companies do to merchants’ families economically) and they’d sign it.
2. The bigger the payment bro, the grander the spoken lies to induce merchants into signing their absolutely trash payments agreement. Legacy payments companies (Worldpay, Global, Fiserv, Shift4) are the worst offenders.

On any given day ~100,000 merchants are being sold complete fabrications about the cost of a payments product and the expected services post-sale.

Sales people at payments companies are knowingly misrepresenting what they’re selling with zero ramifications.

In fact, they relish the deceit.

Why?

Because their contracts ubiquitously contain two key clauses.

First, the right to increase fees, rates, whatever the payments bro wants, whenever they want, often without warning.

Second, a waiver to any class litigation, which in itself should tell you exactly what’s coming for merchants post-signature. How many business agreements have you otherwise seen (or signed) that contain provisions to waive class litigation?

Precisely our point.

Next we’ll show you a nice little example from Shift on how this works in practice.

Here’s the Shift4 agreement in its entirety if you want to see how to engineer the English language to steal from your “customers”.

 

Note that the literal first words of the agreement are the waiver to any class claim:

SECTION 10 REQUIRES ALL DISPUTES WITH BANK OR COMPANY TO BE RESOLVED IN BINDING INDIVIDUAL ARBITRATION — NOT IN A CLASS ACTION, AND NOT IN COURT BEFORE A JUDGE OR JURY. SECTION 9 LIMITS BANK AND COMPANY’S LIABILITY AND MERCHANT’S REMEDIES. BANK OR COMPANY CAN CHANGE THE FEES AT ANY TIME, INCLUDING IN CONNECTION WITH THE RIGHTS IN SECTION 12.7. 

Shift4 burglary agreement

LOL.

Not in a court before a judge and jury.

Because Shift4 is super-duper fair, right? We bet 99.9999% of the times a merchant would consider bringing a claim would be because Shift4 was screwing the merchant.

See the following for a prime example that catalyzed this article – specifics sanitized to protect the afflicted.

A restaurant merchant doing $18M a year was using a POS product that Shift4 acquired. In 2023 the merchant signed a merchant agreement with Shift4 because their only other option was to leave their POS, which would have been painful, and everyone in payments knows this playbook by now.

The merchant was promised a flat rate on processing.

After a while the merchant noticed that their margins keep decreasing.

A payments advisor was brought in and, surprise, the merchant’s rates had increased 3 times since the ink dried on the contract.

The current payments margin is nearly $180K a year.

100. f*cking. basis. points.

Burglary… or Shaft4?

Shaft4, of course.

Logically the merchant decides that they can buy several new POS systems for this amount, with a consultant to manage the entire migration.

So just switch POS, right?

Ruh roh.

Turns out that (drumroll…)

Shift4 has an early termination fee calculated as the average fees payable to Shift4 multiplied by the months remaining in the contract.

That language:

If this Agreement terminates during the Term for any reason other than as a result of an uncured breach by Company, Merchant shall be liable to Company for liquidated damages in an amount equal to the average monthly fees payable by Merchant to Company (excluding pass-through fees) for the Services in the 12 month period immediately preceding such termination (or such shorter period if this Agreement has not been in effect for 12 months), multiplied by the number of months then remaining in the Term of the Agreement.

Shift4 burglary agreement

Check out how this works.

Shift4 decides to jack the rates up one month. They crank the rates SO high that nearly every Shift4 merchant receives a call from their bank letting them know that they’re bleeding cash and going out of business.

Merchant: Hello?

Banker: Hey, so we we wanted to let you know that your margins were -24% last month

Merchant: What?!

Banker: Yea, we audited your payments from Shift4 and it turns out that while you were paying an already-usurious rate of 50 bps two months ago, last month you paid 13,000 bps, or 13% of your revenues to Shift4

Merchant: How is this possible?

Banker: Well, I’m calling you instead of emailing you because you’re illiterate. Looks like you never read your Shift4 contract and they could charge whatever they wanted. Turns out they did.

Merchant: What happens next?

Banker: You signed a 5-year agreement with Shift4. So if we average the two months you’ve been with Shift4 per their agreement, your average payments rate was… 6.75%. Looks like you owe Shift4 6.75% of your revenue for 58 more months.

Merchant: …

Banker: Oh, right, I forgot you’re mathematically illiterate too. Silly me for thinking you’d get into business and actually know how to do anything that’s required to run a business. Well, since your business does $3M in annual processing volume, you’d owe shift4 6.75% of that for the remaining 58 months. That comes to… $978,750.

Merchant: I can’t afford that.

Banker: Just wait: here’s the genius part… there’s nothing preventing Shift4 from raising your rates even further. Maybe next month Shift4 decides that they want to return to space so they charge a totally-fair-for-all-the-value-they-provide 100% rate. At that point your average rate at Shift4 would be 37.83% over 3-months and you would owe Shift4 over $6M to leave.

Merchant: How can this even be legal?

Banker: Oh, it’s definitely not. But you signed a contract that allowed them to indiscriminately raise rates and waived your rights to any class claim, let alone an impartial hearing in front of a judge or jury. Good luck proving that you were lied to in the sales process.

Merchant: What the hell am I supposed to do now?

Banker: Cash out all your savings, sell your house and any assets you have, and consider sex trafficking your children so you can pay Shift4. You work for them if you didn’t already know that.

Merchant: I’m ruined!

Banker: Yep. It’s not as if there are years of documented evidence of these practices covered on ReformingRetail.com. Could you imagine if someone undertook the bare minimum research before spending a material amount of their capital – and often capital from others – before venturing into a new business? What a crazy idea. No way; no way anyone would ever do that.

Merchant: Hold up I need to eat on sum dem turds. What did you say?

Banker: Exactly.

Shift4 merchants are screwed so hard all you can do is give ’em a good LOL.

This particular merchant received terrible local service, rate increases at the whim of Shift4 management, and was using a POS that they learned to be significantly behind competitors that could spell R&D (who would have thought?!).

You just have to appreciate the level of racketeering Shift4 and their ilk get away with.

Let’s send these rates to the stratosphere so they’re visible from our cockpit window when we’re in orbit!

Shift4 executive committee strategy

Good luck Revel and Vectron merchants.

We’re more thoughtful than your new owner, so here’s an Amazon link for adult diapers to prevent you from bleeding out before you finish handing over your life savings to Shaft4.

Don’t be greedy you piece of sh*t customer.

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