Short answer
An early termination fee is what a provider charges if you end a card machine contract before the minimum term finishes. It is usually based on the remaining term, often the remaining rental payments or a share of expected fees, plus a terminal return charge. You can often reduce it by waiting, negotiating or asking for a buy-out figure.
Part of Contracts and switching. Start with the main guide: How to cancel a card machine contract without getting caught out
Key takeaways
- The fee is set in your contract, so the only reliable number is the one your provider gives you in writing.
- Reported UK figures range from around £200 with under six months left to £1,500 or more with over two years left, plus terminal charges.
- Rental and finance for the terminal are often charged on top of the processing exit fee.
- Waiting until the term ends can be cheaper than leaving now, so compare the cost with the saving.
- Pay-as-you-go providers often have no early termination fee, which is a point in their favour for small businesses.
A saving on paper is not a saving in your pocket if it costs you more than you gain to leave. That is the job the early termination fee does for a provider: it makes leaving early expensive enough that you think twice.
The fee is often the biggest unknown when a business considers moving. This guide explains how the fee is calculated, what the reported costs look like, how the terminal makes it bigger and what you can do to cut it. Use it with our guide on how to cancel a card machine contract.
What is an early termination fee?
You will also see it called an early exit fee, a cancellation fee, a termination charge or a buy-out. The names differ, but the idea is the same.
There are usually two separate parts, and they can come from different companies.
- The processing exit fee. For ending the card processing agreement early.
- The terminal charge. For ending the rental or finance agreement for the machine, or for returning it.
Always ask for both figures.
How is the early termination fee calculated?
Contracts use different methods. The most common are described below. Your own agreement will say which applies.
| Method | How it works | Effect |
|---|---|---|
| Remaining rental | Remaining months × monthly terminal rental | Falls steadily as the term runs down |
| Fixed fee | A flat amount, sometimes set against the length of the contract | Simple, but may be high for a short remaining term |
| Percentage of expected fees | A share of the fees the provider expected to earn for the remaining term | Higher for bigger businesses |
| Tiered by time left | A scale, with a higher fee when more of the term remains | Rewards waiting |
| Buy-out figure | A negotiated lump sum agreed on request | Can be lower than the formula |
A scale linked to time left is the most predictable. One UK comparison site reports figures for one large provider of about £200 with less than six months remaining, rising to £1,500 or more with more than two years to go, with a further £150 to £300 for returning the terminal. Those numbers are reported by a third party and may not reflect your contract, so they are a guide only.
The lower bound reported by a UK comparison site for one provider, excluding terminal return charges. Your contract may differ.
The key pattern is clear: the sooner you leave, the more it costs, and waiting can save real money.
Why does the terminal make the fee bigger?
The terminal is often the larger part of the exit cost. A rented machine is usually billed for the remaining rental payments, which can be considerable. A leased or financed machine may require the whole remaining lease to be paid. A returned machine may carry a collection or return fee.
Example. A business has 18 months left on a terminal rental of £25.00 a month and a processing exit fee of £400.
- Remaining rental: 18 × £25.00 = £450.00
- Processing exit fee: £400.00
- Terminal return charge: £150.00
- Total to leave today: £1,000.00
If the business waited until the end of the term, it would pay £450.00 of rental in normal fees and nothing in exit charges. That is the choice to weigh up: pay £1,000 now to leave, or stay and pay £450 over 18 months.
- Remaining rental
- Processing exit fee
- Terminal return charge
- Remaining rental £450 · Processing exit fee £400 · Terminal return charge £150
- Remaining rental £450 · Processing exit fee £0 · Terminal return charge £0
Example: terminal rental of £25.00 a month, processing exit fee and return charge. Illustrative.
Leaving costs an extra £550.00 on top of the rental the business would pay anyway. If the new provider saves £60.00 a month, it takes about nine months to recover that £550.00, and the rest is genuine saving. See is switching worth it for the full calculation.
What should you ask your provider about the fee?
Get the answers in writing, with a date, so the figure is binding.
- What is the early termination fee if I leave on [date]?
- How is it calculated?
- Is there a separate charge for the terminal, and who bills it?
- What would the fee be if I waited one, three or six months?
- Is a buy-out figure available that is lower than the formula?
- Will the fee be waived or reduced if I upgrade, extend or move other services?
- What is the process and cost for returning or buying out the terminal?
How can you reduce or avoid the fee?
The fee in the contract is the starting point, not always the end. These approaches often help.
Wait
If the end of the term is close, waiting can be the cheapest option. Put the date in the diary, and apply for a replacement so that it starts the day after the old contract ends. Check the notice period so that you do not auto-renew. See contract length, auto-renewal and notice periods.
Negotiate
A provider that does not want to lose you may reduce the fee, spread it over several months or agree a lower price at renewal if you stay. One comparison site says it has cut exit fees for clients, though that is a sales claim and should be treated with caution. It costs nothing to ask.
Ask for a buy-out
A buy-out is an agreed payment that ends the contract immediately. The figure may be lower than the formula, especially near the end of the term.
Let the new provider help
Some providers will contribute towards your exit cost, or offer a rebate, if you move to them. Make sure that any such offer is in writing and compare it with the cost of the whole deal. A contribution that is paid back through a higher rate or a longer contract is not a gift.
Move the terminal, not the processing
If the main cost is the terminal, you may find that the processing can be moved separately, leaving the old terminal contract to run out. Check the terms, because some contracts tie the two together. Our guide to double contracts explains the risks.
Choose a contract with no exit fee next time
Pay-as-you-go providers often have no minimum term and no early exit fee. For a small or seasonal business, that flexibility can be worth a slightly higher percentage. The comparison is a simple one: the extra cost of the higher rate each month against the risk of an exit fee later.
Is the fee enforceable?
In general, a fee that is clearly set out in a contract you agreed to is likely to be enforceable, though the details depend on the country and the specific terms. A fee that was not disclosed, or that seems out of proportion to the provider's loss, may be open to challenge. If you think a fee is unfair, raise it in writing, then use your provider's complaints process, and then the ombudsman or regulator for your country. This is not legal advice, so take advice if the sums are large.
For consultants
The exit fee decides whether a switch is a good idea. A saving of £60.00 a month sounds attractive, but if the merchant has to pay £1,000 to leave, the first year is not a saving. Always get the figure first. Then show the merchant two timelines: switch now and pay the fee, or wait for the term to end. Presenting both is honest and often wins more trust than pushing for an immediate switch. In the checkmyrates calculator you can enter the exit cost and see the saving over one to ten years net of it.
Frequently asked questions
What is an early termination fee on a card machine?
It is a charge for ending the contract before the minimum term is up. It may include a processing exit fee and a separate charge for the terminal.
How much is the early termination fee?
It depends on your contract and the time left. One UK comparison site reports figures from about £200 to £1,500 or more for one provider, plus terminal charges. Ask your provider for the exact amount in writing.
Can I get the fee reduced?
Often, yes. Waiting, negotiating, asking for a buy-out figure or getting a new provider to contribute can all lower the cost.
Do pay-as-you-go providers charge an exit fee?
Many do not, and have no minimum term, though you may need to return any hardware you did not buy.
Is the terminal included in the exit fee?
Not always. The terminal may be a separate contract with its own fee. Ask for both amounts.
Is it cheaper to wait until the end of the contract?
Often, yes, especially if the end of the term is close. Compare the cost of leaving now with the extra saving you would make by switching earlier.
Sources and further reading
- UK card machine exit fees and contract terms (MerchantSwitch) (opens in a new tab)
- How to end a card machine contract in the UK (Teya) (opens in a new tab)
- Card machine rental in the UK: costs, hidden fees and when to buy (ExpertSure) (opens in a new tab)
- Competition and Markets Authority (UK) (opens in a new tab)
- Australian Competition and Consumer Commission (opens in a new tab)
Figures in this guide are examples to show the method. Fees, rules and rates change, so check your own statement, contract and current rules before you decide. This is general information, not financial or legal advice.