How do you switch payment processors?
To switch payment processors, you must: (1) Evaluate and select a new processor, (2) Negotiate rates and terms, (3) Set up your new merchant account and API integration, (4) Run both processors in parallel during a transition period, (5) Migrate customer payment methods and subscription data, (6) Test thoroughly before going live, and (7) Notify customers of any changes. The entire process typically takes 2 to 4 weeks.
Switching payment processors is one of the most stressful tasks a merchant can undertake. However, with proper planning and execution, it can be done smoothly without disrupting your business.
This guide walks through the processor switching process step-by-step, the common pitfalls, and the strategies to minimize disruption.
Table of Contents
- How do you switch payment processors?
- When to Switch Payment Processors
- Evaluating and Selecting a New Processor
- The Processor Switching Process: Step-by-Step
- Common Processor Switching Mistakes
- Frequently Asked Questions (FAQ)
1. When to Switch Payment Processors
Before you switch, make sure you have a good reason.
Good Reasons to Switch
• Better Rates: Your new processor offers significantly lower rates (e.g., 0.5% to 1.0% lower).
• Better Service: Your current processor has poor customer service or frequent outages.
• Better Features: Your new processor offers features your current processor does not (e.g., multi-currency support, advanced fraud tools).
• Industry Fit: Your current processor does not support your industry well (e.g., they do not support high-risk merchants).
Bad Reasons to Switch
• Temporary Rate Offer: Many processors offer aggressive rates to new customers, then raise them after 6 months. Do not switch based on temporary offers.
• Chasing the Lowest Rate: Switching processors frequently to chase the lowest rate is disruptive and costly.
2. Evaluating and Selecting a New Processor
Before switching, thoroughly evaluate your options.
Step 1: Identify Your Requirements
What are your must-haves? Examples: * Interchange-Plus pricing. * Support for your industry. * Multi-currency support. * Advanced fraud tools.
Step 2: Get Quotes from Multiple Processors
Contact at least 3 to 5 processors and get detailed quotes. Compare not just the advertised rate, but the total cost including all fees.
Step 3: Check References
Ask each processor for references from merchants in your industry. Call these references and ask about their experience.
Step 4: Evaluate Customer Service
Contact each processor’s customer service with a technical question. Evaluate their responsiveness and helpfulness.
3. The Processor Switching Process: Step-by-Step
Once you have selected a new processor, here is how to switch.
Step 1: Negotiate Terms
Do not accept the first offer. Negotiate rates, fees, and contract terms. Mention that you are considering other processors.
Step 2: Set Up Your New Account
Work with your new processor to set up your merchant account and obtain your new MID and API credentials.
Step 3: Integrate with Your New Processor
If you are using a payment gateway, integrate your new processor into your system. Test the integration thoroughly in a sandbox environment.
Step 4: Run Both Processors in Parallel
For 1 to 2 weeks, run both your old and new processors simultaneously. Direct a small percentage of transactions (e.g., 10%) to the new processor while the majority go to the old processor.
Step 5: Monitor and Test
Monitor transactions on both processors. Ensure that transactions are being processed correctly, settlements are happening as expected, and customer support is responsive.
Step 6: Migrate Subscription Data
If you have subscriptions, migrate the subscription data from your old processor to your new processor. This is the most complex part of the migration.
Step 7: Go Live with New Processor
Once you are confident that everything is working, switch 100% of transactions to the new processor.
Step 8: Notify Customers
Send a notification to your customers explaining the processor switch. Assure them that nothing will change from their perspective.
Step 9: Monitor for Issues
For 1 to 2 weeks after the switch, monitor closely for any issues. Be prepared to quickly revert to the old processor if necessary.
4. Common Processor Switching Mistakes
• Not Testing Thoroughly: Failing to test the new processor before going live can result in transaction failures.
• Not Running in Parallel: Switching immediately without running both processors in parallel increases risk.
• Not Migrating Subscription Data Correctly: Losing subscription data during migration can result in lost revenue.
• Not Notifying Customers: Surprising customers with a processor change can result in support calls and confusion.
• Switching Too Frequently: Switching processors frequently is disruptive and costly.
5. Frequently Asked Questions (FAQ)
How long does a processor switch typically take? 2 to 4 weeks for a smooth transition. If you have complex integrations or many subscriptions, it may take longer.
Will I lose revenue during the switch? If you plan and execute carefully, you should not lose any revenue. Running both processors in parallel ensures continuity.
What happens to my old merchant account after I switch? You can keep it open as a backup, or close it. If you close it, make sure all transactions have settled before closing.
