How to Switch Merchant Accounts without Interrupting Sales

However, it’s possible to transition to a new processor smoothly and with minimal disruptions. In this guide, I’ll walk you through the process step by step, from determining if it’s time to switch to actually cancelling your old account.

How to Know if It’s Time to Switch Merchant Accounts

Before I get into how to switch, you may still be wondering if it’s the right time. There are several signs that indicate you should change processors, including:

Your processing fees are already high and keep going up
If your processing fees seem to constantly rise, it’s time to switch processors. But even if it’s relatively steady, you might be overpaying. You can do a quick comparison by looking at quotes from processors in the CardFellow marketplace. They’re among the lowest you’ll find.

Your current processor has limited or non-existent customer service

Some processors prioritize getting your business, but drop the ball on keeping it. They may offer little to no phone support and make it difficult to get assistance with equipment or questions. If that’s your processor, it’s time to look for one that offers better support when you need it.

You’re on flat rate pricing but your business has grown

Many new businesses start off with flat rate pricing, such as Square or Stripe, because it’s easy to set up and seems less complex than other processing options. It may also be the lowest cost when you start out. But as you grow, flat rate pricing becomes more expensive. Other processors can often beat the cost of flat rate, so it’s worth checking your options. For more info, check our article How to Know If You’ve Outgrown Square.

If any of those sound like your situation, it’s time for a change. But how do you switch without interrupting your ability to take cards? Here are the steps you’ll need to take.

Understand Your Current Contract

When you signed up for your merchant account, you had to sign a contract. This contract (your merchant services agreement) includes key information about cancellation. Dig out your contract and look for:

Contract Length

3 years is typical, but some are longer or shorter. Additionally, if your original 3 years is up, look for any clauses about automatic renewals. Many contracts have 1-year auto-renewal if you don’t cancel prior to the original 3-year term. If you have a month-to-month contract, you won’t need to worry about this.

Required Notice

The processor will specify a notice period, or the amount of time you must provide them in order to cancel. Common notice periods are 30, 60, and 90 days, but could be more or less. Be sure to note the timeframe and mark it in a calendar or to-do list so that you notify your processor within the correct time period.

Termination Fees

Look for any cancellation fees. These are either flat rate or liquidated damages clauses and that difference can have a big impact on when you decide to cancel. A flat termination fee will be a set dollar amount (for example $500) when you cancel. Liquidated damages are calculated on how much money the processor would make over the remainder of your contract. So if you have a lot of time left, you will owe more money. It may be worth it to wait until the end of your contract or closer to it if you have a liquidated damages clause in your merchant agreement.

Consider Equipment

Do you own your current credit card machine or POS system? You’ll need to check if it’s compatible with other processors if you want to continue using it. If not, or if it’s older and you want to upgrade anyway, you can purchase new equipment instead. If you’re leasing a credit card machine or POS system (never a good idea!) you likely have a separate, non-cancellable lease. If that’s the case, you’ll need to review that contract and determine if you’ll be able to migrate it to a new processor.

For online businesses, you’ll need to know what gateway / ecommerce platform you’re using and check compatibility with other processors. Most gateways (such as Authorize.Net) and ecommerce platforms (like Shopify) list their compatible processors online.

Choose a New Merchant Account Provider

This step sounds easy, but it’s critical. You don’t want to choose a new processor only to end up in the same situation that made you want to switch: overpaying for processing or frustrated with the lack of customer service.

Fortunately, there are some steps you can take to compare processors easily. First, you’ll need to understand the available pricing models. These days, most businesses will benefit from interchange plus pricing, but it’s not a silver bullet. Be sure to carefully review any quote you receive from a processor and ask questions where you’re unclear. Secondly, look for the lowest markup over cost. If you’re not sure how to do that, CardFellow has a great guide to credit card processing rates and fees to help you sort it out.

Optionally, if you prefer less of a research-intensive approach, you can use a tool like CardFellow’s free quote comparison marketplace to get quotes from leading processors to evaluate side by side. It’s completely free to use, with no obligation and no sales pressure. Give it a try at CardFellow.com.

Once you’ve chosen your new processor, don’t cancel your existing account just yet.

Prepare Your New Account

This is one of the most important steps to ensure a smooth transition. Set up your new merchant account while your old one is still active. You’ll need to complete paperwork with your new provider as well as potentially purchase and set up new equipment. For ecommerce businesses, you can trial your payments in a sandbox first to ensure everything is working as expected.

Train Staff

Be sure to communicate the change to staff, especially anyone who handles transactions. Provide specifics on when the changeover will take place and offer training on new hardware or systems. Be sure to prominently post a phone number for customer / technical support in case there are any issues with the new equipment or merchant account when you aren’t around.

Switch Over

Once your new account is up and running and staff is trained, it’s time to make the switch. If possible, schedule the switch to happen after-hours. If that’s not feasible, consider scheduling it on a slow day and at your slowest time.

With the help of your new processor, update your POS terminals or change your payment gateway credentials on your ecommerce site. If you take payments using a recurring billing model, be sure to update subscription payments details as well.

Double check that all of your payments are routing to the new merchant account.

Monitor and Adjust

Once you’ve made the switch, closely monitor your transactions for the first few weeks. Verify that your credit card sales in your reporting match the deposits that hit your bank account. Check for any failed transactions or declined payments as a result of changes to your subscription billing details. If you have issues, contact the new processor for assistance.

Cancel Your Old Account

After a few weeks, when everything is running smoothly, follow the process to cancel with your old processor. Be sure to get written confirmation that the account has been closed to avoid any issues later. If you’re not using your old credit card machine or POS system, you can also get rid of it at that point. Request a final processing statement and make sure you don’t have any outstanding balances or charges to pay. Keep all of the records of the cancellation in case you need to show it in the future.

Switching merchant accounts doesn’t have to be a headache. With a little planning, your business can make the change with minimal disruption. Before you know it, you’ll be processing with more competitive rates and better customer service.

If you’re considering a switch and need help comparing processors, CardFellow’s credit card comparison marketplace makes it easy. Sign up today and give us a call for assistance!