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3 Signs It's Time to Switch Payment Processors

Do you get a sinking feeling every time you go to review your monthly credit card processing statement? Is anticipating how much you’ll owe each month a constant guessing game? Are you reluctant to pick up the phone and dial-up customer support because of the long hold times or short answers? Then this article is for you.

While every business owner understands that paying for credit card processing is a necessary cost, it’s still easy to become frustrated with all the hidden fees that can accompany maintaining a merchant account. Unfortunately, hidden fees and undisclosed monthly minimums can account for a fraction of a multitude of things that can go wrong in your relationship with your credit card processor. Expensive equipment leasing fees, unpredictable processing costs, and poor customer support are just a few problems that can arise after signing up with a provider. These issues are compounded by the fact that many providers lock merchants into long-term, automatically-renewing contracts, making it extremely difficult (and usually quite expensive) to drop them in favor of a competitor.

This blog discusses three of the most common problems that warrant switching to an alternative credit card processor


1. Expensive Equipment Leases

Well, the new equipment seemed necessary at the time of signing up.” This might be what you think after watching your credit card terminal leasing fees pile up month after month and realizing that you’ve spent more than the terminal costs to buy it outright—and there’s no end to your lease. As business owners, we understand that you need a credit card terminal to process credit and debit card transactions in person. They can be relatively expensive for a small business just getting started. Paying a small monthly leasing fee sounds like a better deal than fronting a couple hundred on a new terminal that might become obsolete in a few years. The arguments in favor of leasing equipment always seem logical.

  • It saves you money on up-front costs
  • It’s a tax write-off
  • It protects you in case your terminal is damaged, etc.

Unfortunately, these “advantages” always fall short when considering the cost of leasing a terminal. Most standard leasing contracts lock merchants into four-year leases that cannot be canceled for any reason. For example, let’s say you’re on the hook for a four-year lease with 48 lease payments the moment you sign your contract. While $25 a month to lease the terminal might sound great compared to buying it outright, those monthly payments will add up to $1,200 over the life of the lease. Even then, you won’t own the equipment. Considering you could purchase the average countertop terminal for around $200–$300, that’s a giant rip-off.

Being stuck in a terminal lease is reason enough to consider switching providers. Unfortunately, you’re unlikely to get out of the remaining monthly payments on your lease, regardless of circumstances. As a small business owner, you should look for transparent processors that offer preprogrammed terminals that are yours to keep indefinitely for a reasonable price or solutions that integrate with current equipment for a seamless transition. It’s important to note that you’ll likely have to return equipment leased from the old processor to close your account, even if you’ve made all the monthly payments required under your leasing contract.


2. Long-Term Contracts & Pricey Early Termination Fees

From a merchant’s perspective, the best merchant account contract arrangement is month-to-month billing with no early termination fee (ETF). This means the business owner is free to leave whenever they’d like with no penalty. This keeps providers accountable for earning the merchant’s business each time they interact and encourages them to maintain top-notch customer service and support. Unfortunately, merchants don’t get to write the contracts; merchant account providers do.

Before signing a contract, look for an automatic renewal clause that could extend the contract term after the initial period has expired. If you overlook such a clause, your agreement will continue indefinitely with only a narrow window of time at the end of the current contract period, where you can close your account without penalty. Early termination fees vary greatly but typically run around $300–$500. In a worst-case scenario, a contract might also include a liquidated damages clause that could set a business back thousands for closing its account.

Lengthy contract terms and expensive termination fees aren’t a reason to jump ship to another competitor as they are a red flag to avoid signing up with a provider in the first place. Suppose you’ve signed the dotted line and discovered that you’re locked into a contract. In that case, the next critical steps include reviewing the fine print, understanding the requirements for closing your account, and following them to a T. Make sure to time your switch to avoid the automatic renewal date and expensive early termination fees.


3. Poor Customer Service & Support

Unfortunately, many merchants fail to consider the importance of customer service and support until they need to use it. If you have to jump through hoops to get customer service, it’s likely time to consider switching to a provider that’s there to support you. When you have a question, you shouldn’t have to wait. To keep your business running seamlessly and accepting payments at all times, it’s critical to find a provider that offers around-the-clock support and an online bank of resources that you can access anytime. This ensures that you, your employees, and your customers don’t run into unpredictable situations with anyone to have your back.

It’s wise to research a provider’s reputation for customer service online before signing up. The BBB and other consumer protection sites such as TrustPilot are excellent resources for this type of information. Reviews turned off or withheld online indicate that a payment processor’s customer service is lacking, most likely due to long-term contracts that prevent businesses from leaving for an alternative processor.

If you’re experiencing one or more of the situations described above, it may be time to consider alternative providers. Whether you’re looking to consolidate all payment channels under one roof or need a provider with your back, we’re here to help.

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