Switching Payment Providers

Comparing payment providers has been made easier for UK businesses thanks to recent rule changes by the Payment Systems Regulator (PSR). Despite this, finding and switching payment processors can still be a frustrating process if you aren’t sure where to start.

Why switch payment providers?

As a business owner, there are several reasons for wanting to switch payment providers. 

• High processing fees: You are currently paying higher fees than you think are reasonable for your specific business.
• Poor customer service: You are experiencing long wait times for assistance, unresponsive or unhelpful representatives, or a lack of support on specific issues from your current provider.
• Lack of scalability: Your business is growing, but your current provider doesn’t provide the necessary services or features you require to scale nationally or internationally.
• Limited payment methods: Your current provider only supports a limited range of payment methods, making it challenging to accommodate customers who prefer to use other payment methods.
• Funding delays or slow payouts: It takes too long to receive your funds, or your provider frequently holds your funds or freezes your account. 
• Lack of protection against fraud: Your current provider does not provide sufficient safeguards against fraud, particularly card-not-present (CNP) fraud.
• Lack of transparency: Your current provider isn’t transparent with their fees.
• Long-term contract: Your current provider wants to lock you into a long-term contract, but you want more flexibility.
• Poor data security: Your payment provider isn’t doing enough to protect your customers’ data.

How to select a new payment processor

Whether you are switching payment processors to save money on fees, get better customer service or simply find a better fit for your business, here’s a step-by-step guide to help you make the transition.

1. Determine if you can keep your current POS system (and if you want to) 

Your Point of Sale (POS) system is the starting point of the payment process, so it’s naturally the first thing you need to look at once you’ve decided to switch payment providers. 

There are two main types of POS systems: open and closed systems.

Open POS systems integrate with different payment service providers allowing you to switch providers without having to change your hardware. This is normally the best route to take as it will allow you to shop around for the best processing fees without going through the hassle of changing POS systems that you’ve taken the time setting up and training your staff to use. 

If your current POS operates on a closed system (e.g. Square or Zettle), you can’t keep the same hardware if you switch to a new payment processor.

If one of your primary reasons for switching payment providers is to upgrade your POS system, then shortlist POS systems you are interested in and find out which payment providers integrate with them (we will be able to advise you on this).

2. Determine integration requirements

Determine how you want your POS system to connect to your payment provider. 

For example, you could choose an all-in-one solution, that is, a payment provider that combines a POS, payment gateway, and merchant account into one package. Or, if you prefer, you can go for a stand-alone payment gateway software that you can then integrate with your preferred merchant acquirer or payment processor. One advantage of the latter option is that it could help you secure lower card processing fees. 

3. Shortlist new potential payment processors

Now that you know how you want to integrate your POS system with your payment processor, the next step is to create a list of potential payment processors that allow this type of integration. You can see a comprehensive list of popular payment processors here.

Research them, read reviews, and then narrow down your list to about two or three. Reach out to each one and ask for quotes, then compare them.

If you have a preferred provider, but their charges are higher than what you are willing to pay, you can use a competitor’s quote to negotiate lower charges.

4. Select your new payment processor and sign a merchant agreement

After selecting your payment processor, the next step is to read the contract carefully to avoid any unpleasant surprises later. Pay particular attention to card processing fees. 

If you are happy with the contract terms, you’ll need to provide all the requested information and documentation and then wait for the processor to complete their review and underwriting process. Once that is complete, the processor will let you know if they have approved you for an account and, if so, ask you to sign the contract. 

5. Cancel your current contract

Finally, don’t forget to cancel your current contract with your existing processor. Depending on the terms of your contract, you might need to pay an early termination or cancellation fee. Some payment providers may offer to buy you out of your existing contract but beware of the small print — they may do so only after adding restrictive terms to your new contract so they can claw back the cost of doing this. 

If your existing POS system came as part of your former payment provider’s service package, you might also need to return the hardware 

5 common mistakes when switching payment providers

Switching to a new payment provider is a big decision that will impact your business operations significantly. Avoid these 5 common mistakes for a successful switch. 

1. Not understanding the switching process and timeline before you sign your new contract.
2. Not researching the new payment provider thoroughly and checking out their reviews.
3. Not asking questions and clarifications on things you don’t understand.
4. Skimming the contract instead of going through it thoroughly.
5. Not cancelling your contract or informing your current provider to avoid incurring unnecessary future charges.

Problems when switching payment providers

As with any other business-related transition, you can expect a few bottlenecks when switching payment providers. Here are some of the issues you may encounter and which you should thus prepare or plan for in advance.

• Disruption to business operations. The switching processes will take time to complete. This could disrupt your business operations and lead to lost revenue. 
• It’s hard to compare fees on a like-for-like basis. That’s because different payment processors will present them in different formats. One of the priorities of the Payment System Regulator (PSR) for 2023 is to make it easier for businesses to compare and switch card acquirers, so hopefully, this will improve in the future. In the meantime, we can send you multiple quotes in a standard format so you can compare quotes on a like-for-like basis.
• Long contract. Your preferred processor may want to lock you into a longer contract than you prefer. 
• It might be hard to make a switch if you are tied to a long POS contract. You may have to pay a hefty termination fee, for example, to cancel your current Point of Sales (POS) terminal contract if you are switching to a merchant service provider that is not compatible with your current system. The good news is that the PSR is trying to address this particular issue. More specifically, the regulatory body is placing an 18-month maximum duration on POS terminal lease and rental contracts and a maximum one-month notice after any renewal. Further, if there are any termination or exit fees, these will be cost-based and transparent, and providers will have to fully explain them to merchants before they enter into a contract.

Am I eligible to switch payment processors?

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

1. You’ve operated as a business for the last six months.
2. Your business is located in the UK.
3. Your business does not trade in illegal products or services.

Merchant Savvy can help you find a better payment processor 

Looking to switch to a better payment provider who can meet your needs and budget? Sifting through all the available options can be strenuous and time-consuming. That’s where Merchant Savvy comes in. 

Our expert team can handle the tedious task of comparing providers and negotiating processing fees for you, so you can focus on more pressing matters like growing your business. Simply upload a recent statement on this form, and we’ll send you a comprehensive report showing you:

• What you are currently paying and how much you could save by switching providers
• The choice of alternative approved providers and the additional benefits of each
• An explanation of why and how much it will cost per month.

And if you can’t upload a current statement, just fill out the following information.

• Your current payment provider
• Information about the type of business you run
• The type of payment you take (e.g. face-to-face, online, by mail, or phone)
• Your current fees by transaction type and the typical transaction size
• Your business website