by Matt Rej
Search for “Toast vs. Lightspeed” online, and you’ll find dozens of versions of essentially the same information. There’s a table of features compared with check marks next to each, and whoever has the most checks is declared the “winner” (though this is usually based on which processor pays the most for affiliate commissions).
Other guides state the obvious, like “go with Toast if you’re a restaurant or choose Lightspeed for retail.”
All of this stuff can easily be found just browsing either website. But none of it tells you what you actually need to know about payment processing with these providers, especially for the long-term cost implications.
That’s the gap I’ll cover below. And it’s the most important because it’s your payment processing fees (not POS subscription or features) that will cost you the most over the lifetime of your relationship with either provider.
Lightspeed vs. Toast: Quick Comparison
If you read nothing else comparing these providers, this will steer you in the right direction and give you the information you actually need:
- For restaurants, the two systems overlap by ~90% of features, so the checklist everyone else compares won’t decide anything that matters.
- Your processing fees represent the biggest long-term cost (and that’s where these two platforms genuinely differ).
- Toast is a closed system, meaning you must use Toast Payment Processing, and no outside processors are allowed.
- Lightspeed also has its own in-house processing option, called Lightspeed Payments.
- But Lightspeed gives you the option to use your own processor for a monthly fee that scales with your volume (from $200 to $1,100+ per month).
- Neither provider is cheap, though Lightspeed offers more payment flexibility.
Either way, you rarely need to switch systems. If you’re already using one and you’re considering a move to the other, it probably won’t save you much money. It’s almost always cheaper to secure a lower rate with the one you’re already using.
The same holds true if you’re using another POS/processor and considering a switch to either Toast or Lightspeed. You’re probably better off with your existing provider.
Why Feature Comparisons Shouldn’t Decide the Winner
Most “Lightspeed vs. Toast” guides are feature checklists because it’s the easiest thing to compare without having any real experience with either system. And lots of these are just affiliate blogs, so publishers find ways to manipulate one platform to look better based on who pays the highest commissions.
But at the end of the day, the features don’t really matter at all. For restaurants, Lightspeed POS can essentially do anything that Toast can do, and vice versa.
And any slight feature gap can be filled through an extension or integration, if you even need it at all (you usually don’t).
What matters the most is what actually affects your bottom line: payment processing fees.
POS software, hardware, and one-time setup fees are negligible here because, over time, they really don’t move the needle. It’s the cost you pay on every single transaction to accept credit cards that determines what’s most impactful, particularly in the restaurant industry that’s notorious for running on tight margins.
While both Lightspeed and Toast operate as PayFacs, what’s happening on the backend and how you get charged varies drastically from each provider. There’s no clear winner, and anyone using features to determine one or saying “this subscription costs $10 less per month” is focusing on the wrong thing.
The Real Differences That Matter Most
If you strip away the features you’re left with how each company handles your payments. This is where Toast and Lightspeed stop looking so similar:
Toast Locks You Into Its Own Processing
Toast is a closed system. The POS and payment processing are bundled as a single product, and you can’t use Toast’s POS while routing card payments through anyone else.
This means that if you already have a processor and you’re thinking of switching to Toast, you’re forced to cancel your agreement and start a new one with Toast. You’ll be subject to any early termination penalties from your existing provider, and it’s likely that Toast’s flat-rate processing will be far more expensive than what you’re currently paying.
The closed loop also means you have far less negotiation leverage, especially once you’re fully set up and running on Toast’s system. They know they’re the only option, so their rates don’t have to be as competitive as standalone providers.
Some businesses don’t care, and they prefer the “all-in-one” concept for simplicity. Just know you’re paying a premium for this setup, and it’s a big one. Check out our Toast review for more insights on this.
Lightspeed Lets You Bring Your Own Processor
By default, Lightspeed works the same way as Toast out of the box. You get onboarded to Lightspeed Payments, and most merchants don’t give this a second thought because it “seems easier” to get everything from one provider.
The key difference here is that Lightspeed leaves the door open for you to use another processor, if you want to.
You can bring your own processor or switch from Lightspeed Payments to a third-party processor. But this comes with a tiered monthly transaction fee for using anything other than Lightspeed Payments, and that fee climbs with your volume.
This fee structure might be the most important number in this entire comparison because it can ultimately decide whether you think it’s worth having flexibility or if you don’t mind being locked into a POS that doubles as PayFac.
What Happens When Toast or Lightspeed Raises Your Rates
Both of these companies raise rates. It’s just what processors do, and not a knock on either one. But here’s how your negotiation leverage changes when rates go up or new fees get added to your account:
- With Toast, there’s less room for pushback unless you’re a high-volume merchant. Toast holds all the cards because you need them, and they know you can’t go elsewhere without changing your entire system.
- On Lightspeed Payments, you have some leverage because you can threaten to use your own processor. While this move will trigger the monthly third-party fee, Lightspeed will likely earn more than that charge by continuing to process your payments, so they’re more willing to negotiate.
- If you’re using Lightspeed with your own processor, Lightspeed has no control over these increases or your rates. You do have leverage here and can threaten to switch, but your options are limited to only processors that integrate with Lightspeed POS.
This is the biggest cost of being in a closed system. Unless you have a massive processing volume that the processor isn’t willing to lose, they know you’ll have to change everything to go elsewhere.
And they’re betting that most restaurants don’t want to go through this hassle of purchasing all new equipment, re-training staff, re-integrating all back-office and kitchen tools, and paying any early termination penalties.
When Bringing Your Own Processor is Worth the Fee
If you’re committed to using one of these providers but want to avoid the closed-loop setup, your only option is Lightspeed with your own processor. That said, it’s not a no-brainer decision, and you’ll need to weigh the third-party processor fee being charged every month.
Lightspeed uses a tiered structure based on volume here to discourage you from doing this. And for most restaurants, the math doesn’t beat just staying on lightspeed payments. (We lay out the full fee schedule and break-even analysis in our Lightspeed Payments review).
But the exact number isn’t really the point of this comparison. Even a fee designed to keep the door shut still leaves something that Toast never does: a way out that doesn’t require you to rip out your entire POS.
That option is worth something even if you never use it. And it’s the reason why Lightspeed will actually come to the negotiating table when rates go up.
Lightspeed vs. Toast: Who Wins for Which Business
Again, there’s no single winner. And we have no skin in the game here (we don’t benefit if you sign up with either provider).
But here’s a quick reference guide for common situations:
Small, lower-volume restaurants seeking a simple all-in-one solution: Toast wins — It’s a fair trade if you’d rather not think about processing, as long as you accept that it’s expensive and you’re pretty much accepting every future rate increase in advance.
High-volume restaurants: Lightspeed wins — The bring-your-own processor option is the most valuable negotiation lever here. And it’s something that Toast just doesn’t offer.
Any restaurant that prefers leverage over cost: Lightspeed wins — Even with the monthly third-party fee attached, the ability for you to exit without having to change your entire POS setup gives you leverage that doesn’t exist with Toast.
Restaurant tech tools: Toast (narrowly) wins — While Lightspeed does have a restaurant-specific POS offering, Toast has been focused on the hospitality industry from day one. Lightspeed basically offers the same features, but Toast tends to be the preferred choice for staff and owners alike when you take costs out of the equation.
No restaurant: Lightspeed wins — Even though Toast is expanding into other categories, I still wouldn’t consider them for anything other than all-in-one restaurant POS. For retail, hotels, ecommerce, and hospitality-adjacent industries outside of traditional restaurants or quick-service, go with Lightspeed.
Should You Switch From Toast to Lightspeed (or Vice Versa)?
When you compare everything from the processing angle, Lightspeed looks like the safer long-term bet for most restaurant operations.
That said, switching POS systems is one of the most disruptive and expensive things that a restaurant can do. And the cost of replatforming is almost always more expensive than what you’d save on processing in those first couple of years.
The better move is usually to lower your cost on the system you’re already on, and how much you can save depends on what you’re using.
With Toast, your leverage is limited by design. As a payment facilitator (instead of a direct processor), Toast has its pricing baked into a packaged product sold the same way to a lot of merchants. The core processing markup is the product itself, and it’s the piece they’re least likely to move. But there are still costs worth challenging inside of the closed system if you know which ones are actually moveable.
You definitely have more room to work with on Lightspeed, even if you’re using Lightspeed Payments. The fact that you have the option to use your own processor changes the entire tone of the conversation.
This is why we rarely tell anyone to switch. It’s almost always cheaper to fix the rate you already have than it is to start over somewhere new.
Final Thoughts
Deciding between Lightspeed and Toast using feature comparisons is the wrong angle. Both can essentially do the same thing for restaurants day to day.
What separates them is how your processing costs change over time. One is a closed system while the other does allow you to integrate with another lets you integrate with third-party processors.
You need to look beyond the upfront costs, hardware, and software subscriptions to see how an open vs. closed system is going to affect your rates over time. 90-95% of your total costs are going to be on the processing side, so that’s where you should have the most scrutiny.
And if you’re already on one, switching to the other probably doesn’t make sense. But if you’re still unsure about everything, let my team audit your statements for free to see where you can save money and if it makes sense to consider a new POS system and processor. In most cases, it’s cheaper to stay, and we’ll find savings with your existing provider.