Card Machine Contracts, Exit Fees and Switching Provider: UK Rules

LAST REVIEWED 2026-09-05

Two contracts, not one: acquiring vs terminal

When a business takes a card machine, it often signs two separate agreements: one for card acquiring services and another for the terminal itself. The acquiring contract covers the processing of transactions, settlement, and merchant account services. The terminal contract covers the physical device, its maintenance, and sometimes its lease or rental. These contracts are distinct and can have different terms, notice periods, and fees. It is essential to review both documents to understand the full commitment. A provider may offer a bundled package, but legally they remain separate agreements. The Payment Systems Regulator (PSR) has introduced specific rules for terminal contracts, but acquiring contracts are not subject to the same cap. Therefore, a merchant might have an 18-month terminal lease but a longer acquiring agreement. Understanding the difference is the first step in managing exit fees and switching providers.

The 18-month terminal cap

In July 2023, the Payment Systems Regulator (PSR) introduced a cap on the initial term of point-of-sale (POS) terminal lease or rental contracts. Under the PSR's Specific Direction, new contracts for terminal rental or lease cannot have an initial term longer than 18 months. This measure aims to reduce lock-in and make it easier for merchants to switch providers. The cap applies to contracts signed after the remedy came into force. Existing contracts are not affected, but any renewal or extension must comply with the cap. This means that if a merchant signs a new terminal agreement, the initial commitment cannot exceed 18 months. However, the acquiring contract is not covered by this cap, so it may still have a longer term. Merchants should check both contracts to see the full picture. The PSR's remedy also includes other requirements, such as trigger messages and summary boxes, to improve transparency.

Trigger messages and summary boxes

As part of the PSR's remedies, providers must send trigger messages to merchants before a contract renews. A trigger message is a clear notification that the initial term is ending and that the merchant has options, including switching providers. This message must be sent at least a certain period before renewal, giving the merchant time to consider alternatives. Additionally, providers must provide a summary box, which is a concise document outlining key contract terms, such as fees, notice periods, and exit charges. The summary box is designed to make it easier for merchants to compare offers from different providers. These requirements apply to both acquiring and terminal contracts, but the specifics may vary. The trigger message must include information about how to switch and any applicable fees. This transparency helps merchants avoid automatic renewals and unexpected charges. The PSR's goal is to foster competition by reducing barriers to switching.

Early termination fees

Early termination fees are charges that a merchant may incur if they end a contract before its agreed term. For terminal contracts, the PSR's cap on initial terms to 18 months reduces the potential duration of such fees. However, fees may still apply if a merchant terminates early. The amount of the fee is typically specified in the contract and may be based on the remaining rental payments or a fixed charge. Under the PSR's rules, providers must clearly disclose these fees in the summary box and trigger messages. For acquiring contracts, early termination fees are not regulated by the PSR's cap, but they must be fair and transparent. The Financial Conduct Authority (FCA) and the Financial Ombudsman Service (FOS) can consider complaints about unfair fees. Merchants should review their contracts to understand the exact fee structure. If a provider charges an excessive fee, it may be challenged.

Terminal ownership and lock-in

Terminal ownership is a key factor in switching. Some merchants own their terminals outright, while others lease or rent them. If a terminal is leased, the merchant may be locked into a contract with the provider. The PSR's 18-month cap on initial terms helps reduce this lock-in, but it does not eliminate it. After the initial term, the contract may continue on a rolling basis, and the merchant may need to give notice to terminate. If the merchant owns the terminal, they can often use it with a new acquirer, provided the terminal is not locked to a specific network. However, some providers may use proprietary technology that restricts interoperability. The PSR's remedies aim to improve terminal interoperability, but it is not guaranteed. Merchants should check whether their terminal is unlocked and can be reprogrammed. If not, they may need to purchase or lease a new terminal from the new provider.

Step-by-step switching

Switching card machine providers involves several steps. First, review the current contracts for both acquiring and terminal services, noting any notice periods and exit fees. Second, research alternative providers and obtain quotes, using the summary boxes to compare terms. Third, check if the existing terminal is compatible with the new provider or if a new terminal is needed. Fourth, give formal notice to the current provider within the required timeframe, ideally after signing with the new provider to avoid a gap in service. Fifth, arrange for the new provider to set up the account and install or configure the terminal. Sixth, test the system to ensure transactions are processed correctly. Finally, cancel any direct debits or standing orders related to the old provider after the final bill is settled. The PSR's trigger messages and summary boxes are designed to facilitate this process by providing clear information.

What to do if a provider will not release you

If a provider refuses to release a merchant from a contract, despite the merchant following the correct notice procedures, there are steps to take. First, review the contract to confirm the notice period and any conditions. Second, contact the provider in writing and request a release, citing the relevant contract terms and the PSR's rules if applicable. Third, if the provider still refuses, make a formal complaint to the provider's internal complaints team. The provider must respond within a set timeframe, typically eight weeks. If the complaint is not resolved satisfactorily, the merchant can refer the matter to the Financial Ombudsman Service (FOS). The FOS can investigate and make a binding decision. The PSR's remedies may also be relevant if the provider is not complying with the 18-month cap or trigger message requirements. In such cases, the merchant can report the provider to the PSR.

Complaints route

If a merchant has a dispute with a card machine provider, the first step is to complain directly to the provider. Providers must have a complaints procedure and respond within eight weeks. If the merchant is unhappy with the response, or if the provider does not respond, the merchant can escalate the complaint to the Financial Ombudsman Service (FOS). The FOS is an independent body that resolves disputes between consumers and financial businesses. It can consider complaints about unfair contract terms, excessive exit fees, or failure to comply with PSR rules. The FOS has the power to make a binding decision, which may include compensation. The maximum award the FOS can make is not published in this brief, but it is subject to change. Merchants should also be aware that the PSR can take enforcement action against providers that breach its remedies. Complaints can be made online or by post.

Frequently asked questions

Can a card machine contract be longer than 18 months?

Yes, but only the terminal lease or rental contract is capped at 18 months for new contracts signed after July 2023. The acquiring contract, which covers processing services, is not subject to this cap and can be longer. Merchants should check both contracts separately. The PSR's remedy specifically targets terminal contracts to reduce lock-in, but acquiring agreements may still have longer terms. Always review the terms of each contract before signing.

What is a trigger message?

A trigger message is a notification that a provider must send to a merchant before a contract renews. It is part of the PSR's remedies introduced in July 2023. The message must clearly inform the merchant that the initial term is ending, outline their options, and include details about any fees or notice periods. The purpose is to give merchants the information they need to consider switching providers, thereby promoting competition in the card acquiring market.

Do I own the card terminal?

It depends on the agreement. Some merchants purchase their terminal outright, while others lease or rent it. If you lease, the provider retains ownership, and you may be subject to contract terms. If you own it, you have more flexibility to switch providers, provided the terminal is not locked to a specific network. Check your contract to see the ownership terms. The PSR's remedies aim to improve terminal interoperability, but not all terminals are unlocked.

How much notice do I need to give?

The notice period is specified in your contract. For terminal contracts, the PSR's cap on initial terms to 18 months means that after that period, you may be on a rolling contract with a notice period, often 30 days. For acquiring contracts, notice periods can vary, sometimes up to 90 days. Always check your contract and the summary box for exact notice requirements. Trigger messages should remind you of these details before renewal.

Can I switch acquirer and keep the terminal?

Yes, if you own your terminal and it is compatible with the new acquirer's systems. Many terminals are multi-acquirer and can be reprogrammed. However, if you lease the terminal, you may need to return it or buy it out. The PSR's remedies encourage interoperability, but it is not guaranteed. Check with your new provider whether your existing terminal can be used. If not, you may need to acquire a new terminal.