Five Steps to Switching Merchant Services 2024

08 October 2024

Written by Libby James

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

In this article

Share this article with others:

How to Successfully Switch Payment Providers: A Step-by-Step Guide

If you’re considering switching your business’s payment provider to save on credit card processing fees or for better service, it’s essential to approach the transition with care. Making the switch without proper planning can lead to unexpected costs, service disruptions, or termination fees. This guide will help you navigate the process smoothly and effectively.

Step 1: Review Your Current Merchant Account Agreement

Before making any changes, thoroughly review your existing merchant account agreement to identify any potential termination fees or penalties. Here’s how:

Check for early termination fees: Many merchant accounts include a clause requiring a fee if you cancel your contract early. Even if you were told there were no penalties, it’s wise to confirm this in writing.
Understand renewal terms: Some contracts automatically renew unless you provide written notice within a specified period, usually 60-90 days before the contract’s anniversary date.
Document everything: When speaking with your current provider, take notes of the conversation, including the representative’s name and the date. Request written confirmation of any verbal agreements or contract details.

Step 2: Determine Ownership of Your Payment Equipment

Find out who owns your point-of-sale (POS) system or credit card terminal:

Leased, rented, or owned? Some businesses lease or rent their equipment, while others receive it free as part of their merchant agreement. Contact your provider to clarify your equipment’s ownership status.
Impact of switching providers: If you don’t own your equipment, you might have to return it or face additional charges. Knowing this in advance can save you time and money.

Step 3: Verify Software Integration Compatibility

If your business uses specialised payment software to process transactions, ensure it is compatible with your potential new payment provider:

Contact your software provider: Ask if the new merchant account provider can integrate with your existing software. If not, you might need to make adjustments, which could lead to additional costs or a learning curve for your staff.

Step 4: Check Gift and Loyalty Card Compatibility

Gift and loyalty programmes are often tied to your existing payment provider. When switching:

Confirm transferability: Ask the new provider if your existing gift and loyalty cards will work with their system. If not, find out if they offer a conversion service and what the associated costs are.

Step 5: Cancel Your Old Merchant Account Properly

Once you’ve finalised your switch, don’t forget to formally cancel your previous merchant account:

Contact your provider directly: Call your old provider and ask for the cancellation process. This typically involves sending an email or fax with your account details.
Get written confirmation: Ensure you receive an email confirming that your account has been closed or is scheduled for closure. This step will prevent you from incurring unwanted monthly fees.

Why Consider Switching Payment Providers?

Switching providers can bring several benefits, including lower fees, improved customer service, and access to more advanced features. Here are some common reasons for making the switch:

High processing fees: You’re paying more than you should based on your business’s transaction volume.
Poor customer service: Unhelpful support can lead to disruptions and lost sales.
Limited payment options: You want to offer more payment methods, such as digital wallets or international payments.
Slow payouts: Delays in receiving your funds can affect cash flow.
Better fraud protection: Enhanced security measures can protect you and your customers.
Transparency and flexibility: You want clearer fees and less restrictive contract terms.

Common Mistakes to Avoid When Switching Providers

Not understanding the process and timeline: Know how long it will take to switch and what’s involved before committing.
Inadequate research: Look into the new provider’s reputation, read reviews, and ask for references.
Skipping over contract details: Review the new contract thoroughly to understand fees and terms.
Failing to cancel your old account: Make sure your previous contract is properly terminated to avoid ongoing charges.

Potential Issues When Switching Payment Providers

While switching providers can offer many benefits, it’s not without potential challenges:

Business disruptions: Expect a temporary slowdown while systems are updated.
Comparing fees: Different providers present fees in varying formats, making it hard to compare directly.
POS contract complications: You may be tied to your current POS system, making a switch more complex.
Long-term contracts: Some providers might want to lock you into a longer-term agreement.

Eligibility for Switching Payment Providers

You are eligible to switch payment processors if you meet these criteria:

You have operated as a business for at least six months.
Your business is located in the UK.
Your business does not trade in illegal products or services.

Information You’ll Need to Switch Accounts

Prepare the following information before contacting a new provider:

Your current payment provider’s details.
Recent transaction statements.
The type of business you operate.
The types of payments you process (e.g., face-to-face, online, mail, or phone).
Current fees by transaction type and average transaction size.

How The Payments Directory® Can Help

The Payments Directory® is here to support you throughout the entire process of switching payment providers. We understand that navigating through various fees, contracts, and technical integrations can be overwhelming. Our expert team can offer personalised advice, provide multiple quotes in a standard format for easy comparison, and guide you step-by-step to ensure a smooth transition. Whether you’re looking to lower your fees, improve customer service, or find a provider that better suits your business’s needs, The Payments Directory® has the knowledge and resources to help you make an informed decision with confidence. Let us simplify the switch and help you find the best payment solution for your business.

FAQs

What should I do if my existing provider charges a high termination fee?

Negotiate with your new provider—they may offer to cover the cost or provide a discount on their services.

How long does it typically take to switch payment providers?

It can take anywhere from a few days to a few weeks, depending on the complexity of your setup and the providers involved.

Can I use my existing POS terminal with a new provider?

It depends on the terminal’s compatibility. Check with the new provider to see if your equipment can be reprogrammed.

What happens to my transaction data after switching providers?

Your transaction history stays with your old provider, but you can request a copy for your records before closing the account.

Will switching providers affect my customers?

There should be minimal impact on customers. Ensure a smooth transition by notifying them of any temporary changes.

Are there costs associated with transferring my gift card programme?

Yes, some providers charge a fee to convert existing gift cards. Confirm this with the new provider beforehand.

Can I switch providers if I’m on a long-term contract?

Yes, but you may need to pay a termination fee. Review your contract and weigh the costs and benefits.

How do I compare fees between different providers?

Request a fee breakdown in a standard format from each provider to make a like-for-like comparison. Remember to compare on pricing rather than singular rates alone.