Before anything else, read three documents
Check that the savings repay the exit cost, and keep the old bank account open until final fees have cleared too. Your exit cost lives in three places. Find all three before you talk to the new processor, because one of them is often a separate company.
| Document | What to find | What a real agreement says |
|---|---|---|
| Processing agreement or program guide | Initial term, how it renews, how to cancel, early termination fee | One program guide sets an initial term of "three years", then continues until either side ends it in writing [1] |
| Equipment lease (if any) | Lease company, term in months, monthly payment, buyout | A 2016 Clover agreement form calls its lease "a NON-CANCELABLE lease for the full term indicated" [2] |
| Your last statements | Every monthly fee, the effective rate, any change notices | Notices of new or higher fees can give you an exit (see below) [1] |
The lease is the part owners miss. In that same 2016 Clover form, the processing service itself could be ended by either side "upon at least thirty (30) days' written notice", while the equipment lease from a separate leasing company could not be canceled for its full term [2]. Leaving the processor does not end the lease.
And do not assume silence ends a contract. The program guide we read says that if you do not ask in writing to terminate, "you will continue to be charged fees pursuant to this Agreement notwithstanding non-use of your account" [1].
Early termination fees and liquidated damages, in plain words
An early termination fee is what you pay for leaving before the initial term ends. Some contracts list a flat dollar amount. Others use a liquidated damages clause, which estimates what the processor would have earned from you for the rest of the term and charges you that.
The program guide we read uses liquidated damages language. It says that if you leave before the end of the initial term, the processor will "suffer a substantial injury that is difficult or impossible to accurately estimate", and calls the fee "a reasonable pre-estimate of Servicers' probable loss" [1]. It then says the fee applies if you terminate within three years of approval, "if so indicated on the Application on the Service Fee Schedule" [1]. In other words: check your application page. The amount, if any, is written there.
A fee notice can be your door out
In the program guide we read, when the processor gives notice of new fees or increases, "you may terminate this Agreement without further cause or penalty" by telling them before the change takes effect [1].
Wait past the effective date and keep processing, and the guide treats that as accepting the change [1]. Read every notice on your statement, and act before the date.
What to do about a terminal lease
A terminal lease is a separate loan-like contract for the hardware, often with a leasing company you never spoke to. You have four realistic options, and you should price each one before you switch.
- Keep paying it and use the terminal with the new processor, if the new processor supports that model. Ask before assuming.
- Ask the leasing company for a written buyout figure, and compare it with the remaining payments.
- Keep paying until the lease ends and use the new processor's hardware alongside. Expensive, but sometimes the cheapest legal option.
- Return equipment you do not own using the processor's return steps. The program guide we read asks for your merchant number, lease number and the device serial number, shipped "in a manner that can be tracked" [1].
Before you sign anything new, check whether the new offer includes a lease. Several processors publish no-lease, no-exit-fee terms: Square says "No hidden fees or locked-in contracts. Cancel or switch anytime" [4], Helcim lists "No contracts, leases, termination fees or cancellation fees" [5], and Stax lists "No cancellation fees (long term contracts)" [6].
A 10-step plan to switch without missing a sale
- Gather the agreement, lease and the last three statements. Write down the term end date, renewal terms, exit fee and lease buyout.
- Work out your effective rate today: total fees divided by card sales.
- Get the new price in writing: markup, per-sale fee, every monthly fee, contract term, exit fee and equipment terms.
- Run the break-even math in the table at the top. If it does not pay within the time left on your contract, consider waiting.
- Apply for the new account. Do not cancel anything yet.
- When approved, set up and test the new terminal, online checkout and any stored-card or recurring billing. Run a real sale and a refund.
- Move recurring customers' cards carefully. Ask the new processor how stored cards are transferred; never re-key card numbers from paper.
- Pick a switch date. Run both systems for a day or two if you can, then stop taking sales on the old one.
- Cancel the old account in writing, by the method the agreement names, and keep proof. Return or settle any leased equipment.
- Keep the old settlement bank account open and watch it for at least four months for chargebacks and final fees (see below).
After you leave: the old processor can still debit you
Closing an account does not close your history. The program guide we read says that after termination "for any reason whatsoever", you remain responsible for all chargebacks, fees and network fines from sales processed under the agreement [1]. Under Visa's rules, a customer's bank can generally file a dispute up to 120 calendar days from the date a sale was processed [3]. So a sale from your last week can come back as a chargeback months later.
- Leave enough money in the old settlement account to cover a few chargebacks and the final month's fees.
- Keep receipts, invoices and delivery records for your last few months of sales so you can answer disputes.
- Watch for a final statement and check it against your cancellation date.
Do not leave by simply stopping payment or closing the bank account the processor debits. The program guide we read says that if an agreement is terminated for cause, the processor may report your business and its owners to the networks' MATCH list of merchants whose card acceptance was terminated [1]. That can make it hard to get a new account anywhere. A clean, written exit avoids it.
Getting help with the switch
A good new processor should help with the paperwork: reading your exit terms, timing the switch and testing before you go live. BatchOut, our own processing service, reviews the current agreement and statement first and shows the break-even before you commit. Whatever you choose, get the exit cost and the new price in writing, side by side.
Related reading: tiered pricing if your current plan uses buckets, PCI compliance fees to count every monthly line, and chargebacks for what can still arrive after you leave.