Early termination fee calculator
Estimate what it could cost to exit your POS or processing contract.
KORONA POS has no contracts and no early termination fees. Switch processors anytime and only pay a flat monthly rate.
POS early termination fees can cost your business hundreds or even thousands of dollars if you try to leave a contract early. Many merchants don’t realize what they’ve agreed to until it’s too late. Below, we’ll cover what these fees are, the different types, how much they cost, and how to avoid or negotiate them. We’ll also look at what to do if you’re already stuck in a bad contract.
Key Takeaways
- An early termination fee (ETF) is a fine you pay for breaking a multi-year contract with your POS provider or payment processor before the agreed-upon end date.
- Always read the full contract before signing, especially the cancellation clause, so you know exactly what you owe if you need to leave early.
- KORONA POS offers month to month pricing with no contracts and no early termination fees, so you can switch processors freely and leave anytime.
What is a POS Early Termination Fee?
A POS Early Termination Fee is a charge imposed by a payment processing or POS system provider when a merchant terminates their contract before the agreed-upon term ends. The fee compensates the provider for setup costs, equipment subsidies, or lost revenue.
Typically outlined in the service agreement, the fee varies based on contract length, equipment leases, or processing volume commitments.
It can range from a flat fee to a percentage of remaining contract value. Merchants should review terms carefully to avoid unexpected costs when switching providers or closing their business.
Find out how much you’re spending.
Types of POS Termination Fees
POS and payment processing early termination fees depend on the fee structure in your merchant contract. Here are the three most common types.
Flat Fees
A flat fees is a fixed amount, typically $295 to $500, charged regardless of when you cancel. The cost stays the same whether you leave six months or two years into your contract. Flat fees are the most common ETF structure.
Prorated Fees
The charge starts high and drops as your contract progresses. The closer you are to the end of your term, the less you owe. For example, a fee might start at $500 and drop by $100 for every year completed in a multi-year agreement. Prorated fees reward merchants who’ve fulfilled most of their agreement before canceling.
Liquidated Damages
The liquidated damges is one of the most expensive type. Your provider calculates the total revenue lost for the remaining contract months and bills you for it. Cancel halfway through a 36-month deal, and you could owe 18 months’ worth of fees plus hardware recovery costs.
How Much Does an Early Termination Fee Cost?
The cost of an Early Termination Fee (ETF) for a POS system typically ranges from $100 to $500 for flat-rate contracts. however, more complex fee structures like liquidated damages can escalate costs into the thousands of dollars depending on your remaining contract term.
Additional Hidden Exit Costs
- Hardware Lease Payoffs: If you lease equipment, you are often responsible for the entire remaining balance of the lease (e.g., a 48-month term), even if you stop using the service.
- Repayment of Incentives: Some contracts require you to pay back “free” equipment or waived installation costs if you cancel before a specific milestone.
- Inactivity Fees: Some legacy providers charge monthly penalties if you stop processing but haven’t officially closed the account, which can be higher than the ETF itself.
How to Prevent Getting Early Termination Fees and Bad Contracts?
Be wary of any business-to-business contract, POS, processing, or otherwise. There might, however, be situations in which it’s unavoidable. Fortunately, there are steps to take that will protect your business from damage down the road. Here are a few things to keep in mind.
1) Do Your Due Diligence
It’s important to properly research any big purchase, especially one that might be a long-term POS commitment. There are plenty of bad eggs in both of these industries who profit off of uninformed small businesses. Don’t let yours be the next victim.
2) Keep a Healthy Level of Skepticism of Sales Agents
There are plenty of great salespeople. But don’t always believe everything that comes from their mouth. Misinformation can lead to bigger problems down the road.
It might be malicious, but it could also just be a lack of training or knowledge on the service/product being sold. Don’t ever make a decision to purchase something solely because of what you were told by a salesperson.
3) Watch Out for ISOs
Some POS and processing solutions are sold through third-party Independent Sales Organizations (ISOs). In these instances, any promises made may not necessarily be honored by the business itself.
The third-party salespeople are not employees of the business and therefore don’t represent anyone but themselves.
4) Always Read the Fine Print
There are always terms and conditions that can’t be discussed with a salesperson or representative. Take the time to go through the entire contract.
And make sure you’re given the whole thing! Too often, small business owners are only given highlights, only to discover the deal wasn’t as good as it sounded. With processors, understanding the fine print is even more important: look for their interchange plus pricing rates, for instance.
5) Get as Much as Possible in Writing
Again, this is particularly important if you’re dealing with an ISO. If they refuse, it’s a huge red flag. If they don’t, you’re better protected down the road should a dispute ever occur.
6) Close Your Bank Account
You can entirely close the account or flag it with your bank so that they won’t release any funds. This is a last resort option since there are still ways for businesses to get your money if the contract is legitimate.
If you got this route, just make sure to cut it off prior to canceling the contract. ETF will be debited immediately. This will also help you avoid other penalties, such as a PCI Compliance fee.
Learn more about how credit card processing works and save your business money with this free eGuide.
What If You Need to Get Out of a Bad Contract?
Luckily, you still have some options. Now, none of these are guaranteed to get you out of your predicament, but they can certainly help in many cases. Again, avoid putting yourself in this situation if at all possible!
1) Check for Any Changes in Fees
Review recent statements to see if the POS or processing company has changed any fees recently. If so, you have cause to cease the contract without penalty. Just be sure to properly document any changes.
2) Collect Supporting Documentation
If the company ever breached the contract, even in minute ways, gather the proper evidence. Keep a spreadsheet showing how much you’ve paid the processor or POS company as well. If it’s clear that they’ve already made a profit through your business, any termination fees should be waived.
3) Negotiate Politely
Remember, you’re dealing with actual people, on the other hand. And there are still plenty of people out there who like to help. If you are calm, courteous, and maybe a touch desperate, you might have more luck getting someone to make an exception and release your contract.
4) Threaten Legal Action
No one likes to go to court. It’s expensive and potentially a public relations nightmare. You can even keep it more casual and threaten a bad review, a public complaint, or a Better Business Bureau phone call.
Moral of the story? Avoid contracts with both. Save yourself a headache down the road.
What Is the Ideal POS and Processing Solution?
Leaving out any discussion of point of sale features, what SHOULD you be looking for if you’re in the market for a new POS solution?
1) Cloud-Based, Software-As-a-Service
First, you want to find a point of sale that is cloud-based POS and sold as a software-as-a-service (SaaS). This means that you are paying for a subscription to the product. In a world that changes as quickly as that of the point of sale, it can be risky to invest a lot of cash into owning software.
With the SaaS POS model, upgrades and updates are included in your subscription pricing and automatically applied whenever they are released.
2) No Contracts
Next, you don’t want this SaaS agreement to be anything other than month-to-month. No contract, long or short-term, is beneficial. After all, why would a company feel like it needs to trap customers into something? Shouldn’t the customer simply appreciate the product?
Many POS solutions advertise not long-term contracts, but they still require short-term contracts. This is better than a long-term deal, but still not optimal. Your POS system is an integral part of your business,
PRO TIP!
So if it’s not working for you, it’s important to be able to make a change immediately.
3) Separate POS Solution and Credit Card Processor
You also want your POS solution to be separate from your credit card processing provider. As mentioned above, more merchant service providers now provide both services.
This means you’re more likely to be locked into contracts and high credit card processing rates. Look for a pos system that won’t force you into changing a payment processor.
Keeping the two separate provides you with more flexibility which can help you lower your credit card processing fees.
4) No or Low Early Termination Fees
If you need to sign a contract with your POS solution, stay away from ETFs. This can be cripplingly expensive for some businesses. No POS or processing company should have to keep their business profitable in this way.
Often, these will come attached to offers of “free POS systems.” They might even offer you free hardware and software even, but they’ll come attached with minimum processing fees and expensive tech support.
Payment processors giving you trouble?
We won’t. KORONA POS is not a payment processor. That means we’ll always find the best payment provider for your business’s needs.
Choose KORONA POS as Your All-in-One Solution and No Early Termination Fees
Most POS providers lock you into one payment processor. KORONA POS doesn’t. Pick any credit card processor you want, switch anytime, and keep your POS system intact. You’re always free to shop for better rates.
Flat monthly pricing starts at $59/mo per terminal, with no hidden fees, dual pricing, and US-based 24/7 support, plus free training. Call us at 833-200-0213 or book a free demo today.
Speak with a product specialist and learn how KORONA POS can power your business.
Early Termination Fees FAQs
1. Why am I being charged an early termination fee?
You canceled your POS or processing contract before the agreed term ended. Most providers include an ETF clause to recover lost revenue from the remaining months.
2. Do I have to pay the early termination fee?
Usually, yes. If your contract includes one. However, review the terms carefully. Some fees are unenforceable due to unclear language or state consumer protection laws.
3. How to negotiate an early termination fee?
Ask your provider to waive or reduce the fee. Leverage a competitor’s offer, point out service issues, or propose a shorter renewal instead of full cancellation.
