Is Your Payment Provider Locking You In? Here's How to Tell

Most companies do not know they're locked in with their suppliers until they attempt to exit—and by that point, it is already costing them.

Initially, one vendor may look like a good fit. They provide services that you need, make things easier, and promise long-term prosperity. But over time, the cracks become visible. Your costs go up, but your level of service is the same—either that, or decreases in a number of cases. You try introducing new payment solutions or expanding into new markets, but find that it is either impractical or excessively expensive. Your vendor now has control over critical components in your business, so that it is nearly impossible to leave without major disruption.

If you're with one payment provider and haven't compared alternatives, you're already locked in; and the longer you stay, the more difficult and costly it is likely to become to switch.

What Is Vendor Lock-In?

Vendor lock-in is when a company becomes so entrenched with a provider that switching becomes less feasible. This can happen for a variety of reasons. Some vendors use proprietary software that cannot be transferred from one environment to another, so migration is a highly advanced task. Other vendors impose strict contract stipulations that include penalties or hefty exit fees. In the unlikely event that your contract does provide for cancellation, the migration of your information and redesigning your payment infrastructure would be so involved that it would be more practical to remain with your current setup.

At first, vendor lock-in doesn't seem like a problem. Your existing provider is meeting your existing needs, so what is the issue about the future? But with the passage of time, this dependence is a more serious liability, subjecting your company to higher costs, worsening services, and even lost revenue.

How to Know If You’re Locked In

Most businesses don’t realize they’re experiencing vendor lock-in—until it’s incredibly difficult to make a change.

Ask yourself:

• Are you tied to a single payment provider with no easy alternatives?
• Do you see prices increasing but no added benefits?
• Is it difficult or time-consuming to integrate essential tools like fraud prevention solutions?
• Are you unable to easily add alternative payment methods or new gateways?
• Does every change require custom development, long timelines, or vendor approval?

These are all red flags that your current payment setup may be locking you in—and holding you back from growth, flexibility, and innovation.

If ever you've contemplated switching but dropped the idea because the transition was too expensive, inconvenient, or burdensome, that is a red flag. The more challenging the switch, the more your supplier is in control of your business, and the less liberty you enjoy to transform, grow, and optimize your payments.

What If You Weren’t Locked In?

Let's look at a different scenario. Instead of being locked in with one provider, your payment plan is in your hands. Instead of having your vendors dictate how you take payment, how you build your business, and how you optimize transactions, your possibilities are endless, and you can utilize the most effective tools and services for your particular business needs.

The Benefits of a Flexible Payments Strategy

A multi-vendor approach allows you to:

• Accept global payments without being limited by the geographic area served by a single provider. Too many businesses lose sales simply because their provider does not support the most widely used payment methods in their target markets. A dynamic approach means that you can support multiple gateways and local acquirers.
• Connect to best-in-class payment services, and do not be limited by what your sole vendor is capable of. Do you need more sophisticated chargeback prevention, advanced fraud detection, or risk assessment? With a multi-vendor solution, integrate the precise solutions that you need.
  
  
• Comply with evolving payment regulations without vendor-created barriers. Regulations like PCI DSS, PSD2, and 3DS regularly change, and your supplier may not always be current with evolving requirements. With an open payments solution, integrate compliance tools as required, and provide secure, real-time transactions.
• Reduce false declines and optimize approval rates by selecting (see how composer works) how transactions are routed. Some merchants employ very aggressive filters against fraud, leading to missed revenue from legitimate, authorized transactions that were declined. With multiple providers, optimize your settings for fraud prevention and transaction routing so that payments never grind to a halt.
• Route payments intelligently for increased success rates. Some payment processors operate more efficiently in specific markets or with specific card brands. A multi-provider setup lets you route in real-time to the most effective processor, reducing declines and optimizing revenue.
• Analyze payment data across multiple providers in order to obtain valuable insights. When you're locked in with one supplier, all that you can view is what they provide. With a more agile payment infrastructure, you can compare prices, identify trends, and optimize your performance from a 360-degree view of your transactions.

Break Free from Vendor Lock-In

Vendor lock-in is more than just a hassle—it is a business risk that is costing you money, flexibility, and opportunity for growth. When your payment processor owns your payments, they essentially own your revenue stream. Delaying changes in your vendor relationship just makes it more difficult to take control back.

How to Avoid Vendor Lock-In

In order to safeguard your company against vendor lock-in, you should be proactive in maintaining flexibility in your payment plan. This is how:

• Adopt an open payments strategy – With an open payments strategy, you can support numerous gateways, route dynamically, and optimize authorization rates, with full control over your payments, and not your supplier.
• Prioritize flexibility and control – Your payment infrastructure should be in support of your business. Your solution should be capable of accommodating global acceptance, multi-gateway routing, and compliance integration in order to secure and ensure transaction continuity.
  

Why A Vendor-Agnostic Strategy Is The Best Defense

The best way to prevent vendor lock-in is by adopting a vendor-neutral approach, that is, having a payment or technology stack that is not dependent on one provider.

Spreedly integrates with over 140+ payment services, enabling your business to link with multiple gateways, processors, and anti-fraud tools without being locked in with a single provider. With Spreedly, you can:

• Connect to over 100 payment services and gateways in a single integration
• Dynamically route transactions to optimize success rates and reduce costs
• Securely store and tokenize payment data 
• Scale globally without limitations imposed by a single provider
• Analyze payment data across multiple providers to make smarter business decisions

Make more informed business decisions by examining payment information from multiple providers. An open platform gives your company the liberty to set up a payment plan that works for your company, instead of one that locks your business into a restrictive contract with a vendor.

Talk to a Spreedly expert today to take control of your payments strategy.

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