MONTREAL (BRAIN) — Several bike retailers are telling BRAIN they are displeased with Lightspeed’s decision to unify its point-of-sale software with its payment processing software. The retailers tell BRAIN the new bundled offering forces them to adopt both services in order to keep their current POS system, or pay a high fee if they don’t. Lightspeed says the unified program is more efficient and is price-competitive with other options.
“We are pretty bummed. It is not an easy deal to switch POS,” said Kitty Monsalud, the co-owner of Bike Attack, a two-store chain in Southern California. Monsalud, who called Lightspeed's new policy “blackmail,” said she was told she has until June 1 to decide between switching from her current payment processor to the unified Lightspeed system (which would have a fee of $69 per month) or staying with her current processor and with Lightspeed POS. If she stays with the current processor, the business will have to pay $560 per month in transaction fees, in addition to the $136 monthly subscription fee for the POS.
Monsalud said the costs of merchant processing are very complicated and there are about 200 items on each month's bill that have different price structures."I was asking Lightspeed to send me a detailed price and have them compare this to my merchant prices. Still waiting for a reply," she said.
The quoted Lightspeed subscription and transaction fees vary. Another retailer told BRAIN that he was told his subscription fee will become $602 per month if he continues to use third-party processing ($202 for the subscription fee and an additional $400 in transaction fees starting June 1). If he switches to the unified system, his fee would be $138 per month.
But other retailers said it’s not so much the additional cost that concerns them and some said Lightspeed’s payment processing system fees are competitive. But they said they resented the short notice given to decide about a major systems change, and they feel they are being strong-armed into dropping their current payment processor.
“Honestly, we haven't even looked at their programs,” said Krista McKenna of Meridian Cycles in Meridian, Idaho, in an email to BRAIN.
“The point being that they are forcing this on us, and the biggest factor is we have a wonderful relationship with our merchant services company (they started in our area years ago, moved to the Seattle area, and the CEO has made some great employee decisions — to the benefit of the employees — that we agree with so we would like to keep supporting them)”
McKenna said she started looking for alternatives to Lightspeed’s POS as soon as she received the letter.
Lightspeed announced the new program on May 1 in a letter from President JD St-Martin on the company's website.
“(W)e’ve reached another pivotal moment for big change,” St-Martin’s letter said. “Since 2020, the world of payments and commerce have been colliding at an accelerated rate. Where we previously lived in a world of best-in-breed relying on integrations, we now see more and more one-stop shops and end-to-end solutions with embedded financial services.”
The letter said Lightspeed has been maintaining two systems: one that incorporates third-party payment systems and one that uses Lightspeed’s own system.
“But offering both comes with costs and complexities. It’s holding us back from delivering a steady stream of product improvements — the ones that fundamentally transform the way you run your business. So we’re choosing to focus solely on Lightspeed Payments, because we believe the long-term benefits we can bring to your business by embedding our payments service outweighs the short-term inconvenience of switching providers,” the letter reads.
Lightspeed says the new unified system offers retailers “simplified payment processing, faster checkout times, and access to real-time transaction data. The system is also integrated with Lightspeed's inventory management allowing businesses to easily manage their sales and customer data in one place.”
St-Martin’s letter said that Lightspeed’s payment processing will “beat the competitor’s rates 70% of the time.”
One retailer was quoted a fixed rate of 2.60% + 0.10 for all card types.
BRAIN reached out to Lightspeed’s media department about the change and was referred to a FAQ on the changeover (attached). A Lightspeed representative also told BRAIN that the company gave all customers a minimum of 30 days' notice to make the transition to Lightspeed Payments.
"We understand change is never easy, so we are doing everything possible to support our customers to facilitate a smooth transition," the representative told BRAIN.
The FAQ said that new Lightspeed customers are being sold the unified system; using a third-party processor is not an option for new customers. It also said that Lightspeed is making the transition easier for retailers by providing free payment terminals for each register, offering to buyout contracts to cover termination fees from their existing processor, providing free on-site installation and trying to match or beat competitors’ processing rates.
