Card machine contracts and exit fees explained

The short answer

You can usually leave a card machine contract early, but it may cost you. What it costs depends on what your agreement says, so the first job is to find the document and read the sections on the end date, the notice period and early termination. If you are thinking of switching, ask us about the exit cost. In most cases, subject to approval, we can help with your exit or termination fee.

This guide explains how card machine contracts are put together, what goes into an exit or termination fee, and what to check. It is general information, not legal advice, and your own agreement is what counts.

Why there is often more than one contract

A card machine set-up can involve several agreements, each with its own terms:

• The card processing agreement: the arrangement that lets you accept card payments and sets your rates.
• The terminal agreement: the rental or lease of the card machine itself. It may be with the same company or with a separate finance company.
• Add-ons: a payment gateway, a monthly service plan or an insurance-style cover for the equipment.

Cancelling one does not always cancel the others. A common surprise is ending the processing agreement and then still being billed for the terminal. Find every agreement before you give notice to anyone.

What an exit or termination fee is made of

There is no single formula. These are the elements that most often appear, so look for each in your paperwork:

• Remaining rental payments: the terminal rental for the months left on the agreement. This is often the biggest part.
• An early termination charge: a fixed sum, or a share of the fees you would have paid, if you leave before the end date.
• Equipment charges: a fee if you do not return the terminal on time or in the condition required.
• Minimum monthly service charges: a top-up that continues to apply until the agreement ends.
• Admin or closure fees: a charge for closing the account.
• Anything outstanding: unpaid fees, chargebacks still being worked through and, where it applies, a charge for not completing PCI compliance.

Ask for a written settlement figure that lists each item. A single number with no breakdown makes it hard to check, and a breakdown often shows items that can be questioned.

Notice periods and contracts that roll on

Many agreements do not simply end on the date they reach. They renew for another period unless you give notice in a set way and within a set window. Missing the window can tie you in for longer. Check the following in your agreement:

1. The end date or renewal date of each agreement, and put it in your diary together with the notice deadline.
2. How much notice you need to give, and from which date it counts.
3. How notice must be given: in writing, by post, by email or through a portal, and whether you will get a confirmation.
4. What happens at renewal: whether the rates or the rental change when the agreement rolls on.

Keep a copy of every notice you send and of any reply.

Under Payment Systems Regulator rules, terminal rental contracts with the largest providers are limited to 18 months and then roll month to month with at most a month's notice. Check whether this applies to your provider.

If you repay a business cash advance from your card sales, tell us before you switch, because the repayments are collected through your current card processing.

Can I leave a card machine contract early?

Usually, yes, by paying what the agreement says you owe, which may include the items above. In practice there are four routes. You can wait for the end date, negotiate with your current provider, switch and have the exit cost dealt with as part of the move, or, if you think you were given wrong information when you signed, raise a complaint. Our guide to being stuck in a card machine contract goes through these options in turn.

What to check before you sign any new agreement

The best time to deal with an exit fee is before you sign. Ask these questions and get the answers in writing:

• What is the notice period, and how do I give notice?
• Does the agreement renew automatically, and on what terms?
• What would I owe if I left in the first year, and in the second?
• Is the terminal on a separate agreement, and who is it with?
• Are there charges for returning the terminal, for a minimum monthly service or for closing the account?
• Can the provider raise its rates or fees during the agreement, and what notice would I get?

If an answer is vague, that is information in itself. Our card machine rental guide and card machine fees guide cover the other charges to look for.

Common questions

Related

• Stuck in a card machine contract: your options
• How to switch card machine provider
• How to read your card machine statement
• Card machine rental: what to check
• Card machine fees explained