Montreal-based provider of technology solutions for merchants Lightspeed now requires its customers to use its payment platform, failing which they will have to pay additional fees.
The company, which offers cash advance, inventory management, shipping, marketing, loyalty and analysis tools, has so far allowed its customers to use the payment solution of their choice.
Merchants who choose to continue using a third-party payment solution will now be charged a monthly fee of US$400, as listed on the company’s site.
Lightspeed urges customers to switch providers before the end of a 30-day notice period to ensure third-party processing fees do not apply.
It was not possible to speak to Lightspeed management. However, the company says in an email that its goal is to get customers to choose its integrated solution and that the third-party processing fee that will be charged to those who don’t adopt its payments solution will be “based on a percentage of their turnover, a common practice in the industry, it is said.
“This strategy is in line with the company’s goal of accelerating adoption of its payment solution,” commented analyst Kevin Krishnaratne of Scotia.
We also promise to provide free payment terminals for each merchant’s checkout, and to offer free in-person facilities.
Lightspeed began by notifying about 400 of its customers in North America in recent days. The measure will be extended to all North American retail, restaurant and hospitality customers (new and existing) in the coming months. In the longer term, the measure will be imposed on all of the company’s customers around the world.
Since competitors like Toast and Clover, for example, already require payment solution integration, Kevin Krishnaratne believes that the risk of customers leaving Lightspeed and going to a competitor is low, “especially considering disruptions related to the replacement of a retail operating system,” he said in a note sent to his customers.
The decision made by Shopify at the beginning of the year to increase its prices seems to have a limited impact on the churn rate, he also notes to show his confidence following the decision of Lightspeed.
The payment to process sales and get paid option has been offered by Lightspeed to US retailers since 2019, and since 2020 to Canadian merchants.
Management has just made another important gesture after announcing last year that it was now focusing its energies on large customers, deemed to be more profitable for the company.
Lightspeed went public four years ago at an initial price of $16. The stock rose as high as $160 two years ago before falling to its current price of around twenty dollars on the Toronto Stock Exchange.
The company will present its year-end financial performance on May 18.