How To Switch Your Merchant Services Provider: Full Guide

When switching merchant services, it pays to be proactive. From carefully reading through your existing contract to checking for integrations, there are a few important steps you should take to avoid costly cancellation fees and ensure a seamless experience. 

If you’re constantly having problems with your current provider or are tired of high fees, it is time to make a change. Before switching credit card processing companies, you can use our guide to learn the most common pitfalls and opportunities along the way. We’ll look at step-by-step instructions, so you can switch merchants with the least stress possible.

TL;DR

• Before you find a new merchant services provider, you need to understand the reason why you are leaving your current provider.
• Review your existing contract to spot early termination and cancellation fees. 
• Check to see if you will need to return your equipment rental or lease.
• To locate the best provider, you need to understand your company’s current and future needs. Then, find a provider that has the services and fee structure that match these requirements.
• Compare multiple providers to see which one is the best balance of features, support, and affordability.
• Some providers don’t transfer gift cards and loyalty cards, so check before you end your contract.
• Find out if the new provider has the right integrations for your tech stack.

Test your new system during off-peak hours while your old contract is still going so that you can avoid downtime and dissatisfied customers.

Reasons Why You Need To Switch Your Merchant Services Provider

Many businesses decide to change merchant service providers for a few common reasons.

• Lower Your Fees: Junk fees, hidden costs, and high interest rates can quickly add up. Often, sketchy providers won’t advertise these fees, so they may come as a surprise. If you aren’t happy with the fees you’re paying, it makes sense to switch to a different provider. 
• Improve Your Customer Service Experience: Similarly, some providers offer a poor customer service experience and long wait times. Your customers could make a purchase at any time of the day or night, so you need a provider that offers 24/7 service. When you work with the best providers, you can also get a dedicated account manager.
• Boost Your Scalability: Sometimes, a provider will be an effective option for your company while you’re small. As you scale into new markets, you may need a provider that has higher volume caps, support for multiple currencies, advanced data reporting, and customization options.
• Access Specialized Features: Switching credit card processing companies may be necessary if you want the latest technology, like contactless payments and new software integrations. You may also want specialized payment processing services that aren’t available with your current provider.

Ultimately, switching your merchant services provider is required if you aren’t satisfied with your current provider. If you need support or advice along the way, the experienced payment processing experts at PayCompass can help.

Guide to Switching Merchant Services Providers

To make switching payment services a little easier, we’ve gathered together the most important steps involved in the process.

1. Review Cancellation and Early Termination Fees

Before switching merchant accounts, you will need to determine if there are any penalties involved. Often, the merchant services agreement (MSA) will entail multiple pages and a lot of fine print, so it is easy to miss these fees. In some cases, merchant services providers will incorrectly tell you that there isn’t a termination fee when you sign up. 

To protect your bottom line, you need to read through your contract. Look for fees and deadlines. For example, many MSAs require you to notify the provider 60 to 90 days before you want to stop using them. Additionally, some MSAs state that your contract will automatically renew for another year if you don’t notify the provider in a timely manner.

You should also investigate whether there are early termination fees, cancellation fees, and other hidden costs. Additionally, there may be fees for returning equipment rentals.

2. Evaluate Your Current and Future Business Needs

Many companies change providers as they grow. To avoid switching merchant accounts in the future, make sure to plan ahead. Carefully evaluate your current and future needs. 

For instance, you may plan on expanding into a different industry in a few years. Right now, you should verify that your new provider offers services for that industry. You also need to make sure the new provider has the technology, fee structure, and services you need in the present and future.

3. Determine Who Owns Your Existing Point-of-Sale (POS) or Credit Card Terminal

After you sign your MSA, it’s easy to forget about the important details involved in the contract. Many companies forget that they have to return their POS and terminal to the provider. These devices are often classified as equipment rentals or leases, so not returning them can result in steep fees.

4. Consider Different Providers, Contracts, and Pricing Structures

Once you know what type of provider you need, the next step is comparing your options. Look at each provider’s contract terms, pricing structure, service options, data security, compliance support, and migration help. Get a quote from every provider in writing so that you can easily compare them.

Don’t forget to review the new provider’s termination rules and cancellation fees. Although you’ll ideally pick the perfect provider right away, it’s better to be prepared. If you do need to switch to someone else, you don’t want a lot of red tape and cancellation fees holding you back.

5. Double Check the Available Integrations 

Whether you use an e-commerce site or advanced accounting software, you should make sure the new provider offers your desired integrations before switching payment services. You can check with your software company or the merchant account provider to see if the right integrations are available.

6. Make Sure Your Gift Cards Will Continue To Work

When switching merchant services, you should check to see if your gift cards and loyalty cards will still function properly. These are often set up through your merchant services provider, so you may need to figure out a migration plan in order to keep using them. 

However, even if the cards can be converted, it may be expensive. Before transferring the gift cards or loyalty cards over, you should check to see if there is a gift card conversion cost.

7. Take Part in the Underwriting Process

Before you can switch merchant accounts, you have to undergo the underwriting process. Depending on whether you use a traditional or high-risk merchant account provider, this process can take different forms. Traditional account underwriting relies heavily on credit scores and can be completed quickly. 

With a high-risk merchant account, the underwriting process will involve more work. The provider will review your chargeback history, credit score, reputation, business history, and sales volume. You may be asked to provide additional documentation or to answer questions. Then, the underwriters can determine the financial risk involved in offering you an account. 

8. Personally Cancel Your Merchant Account

Once you are ready to start switching payment services, you need to personally call your merchant account provider. They will walk you through the process involved. Afterward, they should send you an email or written confirmation that the account has been canceled. If they don’t, send them a message in writing to request confirmation for your records. 

Even if you stop using the merchant account provider’s services, they will continue to charge you if the account isn’t officially canceled. By handling this process yourself, you can make sure that the account is canceled properly and get documentation of it.

9. Sign a Merchant Agreement

If you are confident that you have found the right processing company, the next step is signing the merchant agreement. Unfortunately, the MSA may be needlessly complicated. Sales representatives often add hidden fees and terms, making it difficult to know exactly how much you are actually paying. 

To avoid excessively high charges, you should never sign an MSA that uses tiered pricing. In the contract, tiered pricing may be referred to as qualified, mid-qualified, and non-qualified. A good contract will charge a base processing rate, although American Express interchange fees are an exception to this rule.

10. Prepare Your Migration Plan

The next step is to prepare your migration plan. You’ll need to determine which data needs to be moved and if the new provider supports the features you need. Before the big day, you should test the new system to make sure your software integrations work with it.

11. Test Your New System

Whenever possible, it’s a good idea to end your old contract after your new one begins. This allows you to have a backup system while you migrate data and test the new system. Before switching payment services completely, you should test each payment channel on the new system. To avoid disruptions, you’ll also need to train your staff members on the new provider’s platform and give them time to practice with it.

12. Switch Over Completely

If everyone is trained and you’ve ironed out all of the kinks, you’re ready to switch the system over. This should be done during off-peak hours so that it disrupts your operations as little as possible. Once your new system is working successfully, disable transactions with your old provider.

How PayCompass Can Help You Switch Credit Card Processing Companies

At PayCompass, we can help you switch merchant accounts as effectively and efficiently as possible. First, we conduct a free cost and rate analysis to help you understand your current fee structure. Then, we can compare this information to our own offer so that you can discover exactly how much you will save by switching to PayCompass. 

As a business owner or manager, your time is best spent on running your business. Because of this, we do everything possible to minimize your company’s downtime and avoid any hassles. Our team provides seamless transitions through parallel testing, smooth onboarding, and excellent customer service. Plus, our PCI DSS-compliant systems, tokenization, and next-generation payment solutions ensure your data is protected at each stage of the transaction process.

Final Thoughts

When switching merchant services, it helps to have a provider you can trust. Switching credit card processing companies can lead to downtime and deter potential customers if the process isn’t handled properly. Unfortunately, many MSAs are unnecessarily complicated and involve expensive cancellation fees. 

By being proactive, you can avoid costly headaches. Researching different providers, planning ahead, and reading your MSA carefully can help your company save time and money. 

Learn more about switching to a new merchant services provider by reaching out to our payment processing experts today.