With payment processing fees continuing to rise, many businesses think switching processors is the fastest way to cut costs. On the surface, it seems like a logical solution. You might have even found another payment processor offering a lower rate than your current provider.
But in reality, switching often creates more problems than it solves. And it usually doesn’t lower costs the way merchants expect.
I wrote this guide to help you understand why switching payment processors is rarely the right move, and what you can do instead to save money without disrupting your operations.
Why Merchants Think Switching Will Save Them Money
Let’s quickly debunk some of the top reasons why merchants think it’s a good idea to switch processors. But as you’ll see, those reasons aren’t actually valid when you dig a bit deeper.
“My fees are too high.”
You’re right. Your fees are probably too high.
This is by far the most common reason why merchants want to switch providers. They see their effective rate creeping up, compare it to a competitor’s teaser offer, and look to jump ship to save money.
But most businesses don’t realize that those same inflated fees exist with every processor. This is an issue with your specific provider. The entire industry operates this way.
Changing providers doesn’t fix the underlying problem. You’re just trading one set of inflated fees for another, and creating tons of unnecessary (and expensive) headaches along the way.
“A sales rep promised me a lower rate.”
Of course they did. That’s their job.
New processors always undercut your current rates because they know what you’re paying and they want your business. They’ll promise to cut your existing rate by $0.05 or $0.10 per transaction or shave 0.025% off your effective rate.
These marginal savings can definitely add up to thousands of savings—on paper. But there’s a catch (or several catches).
First, these quotes are almost based on introductory rates that won’t last. Second, these quotes typically won’t include all the fees you actually pay. And third, your processor has every incentive to increase your rates once they have your business locked in. They know you won’t want to switch again.
“I saw a flat rate offer that looks cheaper.”
Flat-rate processing sounds appealing because it’s so easy to understand. And if you’re tired of looking at monthly statements with hundreds of line items and trying to decipher interchange categories, I can see why you’d be drawn to flat-rate offers.
The problem is that flat-rate pricing is almost always more expensive.
There’s so much margin baked into the flat rate that your processor could be profiting upwards of 4-5x more than they would be if you were on an interchange-plus contract.
Avoid flat-rate pricing at all costs. Don’t be fooled by its simplicity.
“My processor increased my rates again.”
This is frustrating, and it’s probably the most legitimate reason why merchants want to switch. Especially since you never actually agree to a rate increase. You’re just sent a notification with the dates your rates are going up.
But here’s the reality: every processor increases rates.
It’s part of their business model. They acquire your account at a competitive rate and then gradually increase your fees over time. Whoever you’re thinking of switching to will do the exact same thing, and your rates with them might end up being higher than what you’re paying right now.
Instead of switching, you can push back when your processor sends you a rate increase notice. When we negotiate on behalf of our clients, we can often get rate hikes reversed and secure additional savings to prevent future increases.
Hidden Costs of Switching Payment Processors
Sales pitches from new providers usually focus on the supposed savings. What they won’t tell you about are all the hidden costs and headaches that come from switching:
- Early Termination Fees — Lots of contracts have early termination penalties that can cost you thousands for canceling. If your contract has a liquidated damage clause, it will likely cost you tens of thousands in penalties.
- Integration Nightmares — If your processing is integrated within a CRM tool or industry-specific platform (like dental or veterinary practice management software), switching processors can break those integrations and require expensive development work to fix.
- Operational Disruptions — Swapping terminals, retraining staff, and dealing with funding delays during the transaction can create serious downtime and confusion for your business.
- New Contracts — The contract terms offered by the new processor will likely have the exact same early termination penalties and auto-renewals, giving them the freedom to raise your rates (just like your current provider).
- Hardware and Equipment Overhaul — Some processors may require you to replace perfectly good equipment with their devices, and your sales rep might even convince you to lease your terminals (which is an expensive mistake).
- More Bogus Fees — Beyond the new rate per transaction, your monthly statements will be filled with other junk fees and inflated rates that make your effective rate significantly higher than you were expecting.
- Data Loss — Switching providers can wipe out your historical reporting, customer account information, cards on file, and other data you’ve built up over time.
When you factor in these costs, the alleged “savings” you’d get from switching quickly disappear.
Would you want to save $5,000 on credit card processing next year if it costs you $15,000 to implement? I doubt it. But that’s pretty much what happens when you switch providers.
Quotes From New Payment Processors Are Almost Always Misleading
Sales reps working for payment processors are really good at their jobs. They’re trained to tell you exactly what you want to hear, even if those words don’t actually end up applying to your new contract.
We see this all the time. Our clients will forward us email exchanges with a sales rep that makes it sound like a merchant’s new rates will be dramatically better than what you’re paying, even when the actual costs are nearly identical.
The most common point of deception is them quoting you only the markup rate. A sales rep might say, “We’ll process your cards at interchange plus 0.20%”
Which sounds great until you realize they’re not mentioning the $0.15 per-authorization fee, monthly gateway fee, PCI compliance fee, settlement funding fee, statement fees, and all the other bogus charges that appear on your bill.
Another deceptive tactic is when the sales rep compares their best-case scenario to your worst-case costs. They’ll look at the most expensive rates on your statement (like a downgraded transaction) and compare it to their lowest possible qualified rate.
Of course their rate will look better. They’re not comparing apples to apples.
Perhaps the most misleading of all is the fact that your introductory rates aren’t set in stone. Your contract will have terms stating that your processor can basically raise prices whenever they want, and in some cases, they’ll do this as early as six months after you switch. If not, you can almost always expect an increase in your second year.
We’ve audited thousands of statements from merchants who switched processors to “save money.” And in the majority of those cases, they’re paying more than they did with their old provider. The promised savings simply don’t apply in practice once all of the extra fees are accounted for.
It’s Easier to Negotiate With Your Current Processor
I’m going to let you in on an industry secret that most merchants don’t understand: your current processor desperately wants to keep your business.
Losing an account is expensive for them. Their entire model is built on acquiring merchant accounts and keeping them for the long run. So all of your future revenue is baked into their revenue estimates.
This gives you a ton of leverage.
Your processor would rather reduce your rates and keep you as a customer than lose you entirely. They have built-in margins they can comfortably give up, and they’ll do it if the alternative is watching you leave.
The problem is that businesses rarely negotiate. They look at their statements, feel frustrated, and assume the rates are fixed. Or they try to negotiate but give up as soon as they hear “that’s the best rate we can offer.” Processors count on you being passive here.
Everything other than the interchange rate is negotiable. That means your processor’s markup, ancillary fees, random monthly fees—literally everything else—can all be adjusted. Your processor has far more flexibility than they’d ever admit.
This is where having expertise matters. When you call to negotiate, your processor can tell you anything. But when we negotiate on behalf of our clients, processors can’t use those same tactics.
We represent hundreds of other merchants using the same processor. So we know exactly what rates they’re offering other businesses, which fees are mandatory, and which ones are bogus. And we know their actual bottom-line numbers (not the “best rate” they tell merchants who call on their own).
Switching Processors Typically Won’t Save You Any Money
Let’s do the math on a typical switching scenario to see why the numbers rarely work in your favor.
Say you’re processing $100,000 per month at a 2.5% effective rate (paying $2,500 in fees). A new processor quotes you at 2.3%, which would save you $2,400 per year.
Sounds good, right? But now add in the real costs:
- $500 early termination fee
- $5,500 integration costs
- $3,000 on new hardware
- $1,500 on time spent training your staff
- $2,000 lost on productivity during the transition
You’re at $12,500 in switching costs just to save $200 per month. It will take you over five years just to “break even” here. And that assumes your processor will never increase your rates (which they absolutely will).
Even if your new processor can lower your effective rate by 0.5% and we cut your switching costs in half ($6,000 in annual savings and $6,250 in switch fees), you’re basically back to even after a year in a borderline unrealistic scenario. Just in time for a rate increase that washes away any potential “savings.”
Merchants who save money by switching processors are statistical outliers. For the vast majority, switching is a net loss that feels like a win for a few months before reality sets in.
How to Actually Save Money on Credit Card Processing (Without Switching)
The most effective way to reduce payment processing costs is by negotiating better rates with your current provider. This approach gives you the savings instantly without the downsides associated with switching.
Start by auditing your statements. Find out what you’re actually paying to identify inflated markups, unnecessary fees, and bogus charges that don’t correspond to actual services.
We find savings on 96% of statements we audit. So there’s a high probability your bill is filled with extra fees that you shouldn’t be paying. And if not, it’s good news. It means you’re already getting a good rate that likely can’t be beat by another processor.
Then pick up the phone and negotiate (or send an email). Don’t just ask if they can lower your rates. Demand a reduction because you’ve uncovered junk fees and found a better deal from another provider.
Be specific about which fees are bogus and which competitor rates you’ve researched. Don’t take no for an answer, and push back if they claim your rates can’t be changed.
If your processor isn’t budging, you can bring in the outside help of a merchant consultant. This is what we do every day here at MCC—saving money for our clients without having them switch providers.
We audit your statements for free, identify every inflated fee and excessive markup, then negotiate directly with your provider on your behalf.
Our leverage and expertise almost guarantees you’ll save money on processing. And since we operate on a success-based model where we share a percentage of your savings, you don’t pay anything if we don’t save you money. So there’s no risk.
Best of all, we’ll continue monitoring your statements every month to ensure your processor upholds their end of the bargain. If they try to raise your rates again or add new bogus fees, we’ll identify them and get them removed.
Should You Ever Switch Payment Processors?
No, switching processors is almost always a bad idea. You’ll rarely save money in the short term, and you’ll likely end up paying more over the long run compared to your current provider.
The best way to save money on credit card processing is by negotiating better terms directly with your current provider.
That said, there are a few rare (but legitimate) reasons it makes sense to switch. You can consider getting a new provider if:
- You genuinely need new technology that your current processor can’t provide.
- You’ve already gone through a professional audit and your processor refuses to negotiate.
- Your processor is clearly adding completely fraudulent charges to your account and won’t fix them (even after you’ve called them out).
Otherwise, don’t change processors.
Trust me. The savings they promise won’t end up materializing, and the switching costs will be much higher than you expected.
Maybe you’re expanding internationally and need multi-currency processing that your current provider doesn’t offer. Or you need to integrate credit card processing with an ERP system that only works with specific processors. In these scenarios, switching is a viable option—but don’t expect it to save you any money.
Final Thoughts: The Grass Isn’t Always Greener
Switching payment processors might feel like you’re taking action or standing up for yourself. You’re fed up with high fees and frequent rate increases, and now you’re “sticking it” to your processor by leaving.
But in reality, your new processor is going to give you the same problems as your current provider.
The payment processing industry is unregulated, which essentially means it’s the wild west. All processors essentially have a license to do whatever they want. Adding bogus fees and increasing your rates without cause is just what they do.
And your new processor has even more leverage than your current provider because they know you won’t want to switch again. So their rate hikes can be even more egregious.
So should you switch processors? In my professional opinion, the answer is no.
That said, it’s important for you to understand that your current processor is more than likely overcharging you.
While switching won’t save you money, negotiating will. So if you need help with this process, contact our team here at MCC for a free statement audit. We’ll show you exactly how much you can save by negotiating better terms with your current provider.