Kateryna Volivach, a General Counsel, currently working under an NDA, and who has supported fintech businesses across more than 25 jurisdictions, tells Payment Expert how fintechs can keep serving customers when a payment partner restricts or withdraws service.
She explains the contractual safeguards, internal roles and exit planning fintech firms should put in place before a provider changes the rules.
In the fintech world, companies that offer payouts to small businesses in multiple countries collaborate with payment partners. But when those payment partners stop supporting one customer category, how do you continue to serve customers who are now excluded by your payment partner?
Firstly, your operations team should identify pending payments and reconcile balances, including funds subject to a lawful hold. Support must explain to customers what is currently known about access to funds, without promising any particular release date. Regardless of the payment provider’s decisions, your obligations to your customers continue to be of the utmost importance.
I advise founders to test those situations during partner selection. All aspects of the organisation including legal, compliance, product, and finance should collaboratively discuss what they may need to do if a provider restricts service.
Record the service you have approval to offer
As is the case with any fintech operation, you need legal approval for your potential customers. Providers sometimes cover your desired country while declining your particular customer base or offered payment plan. Understanding the exact scope of a payment partner’s service will help your team get to work faster.
In these early conversations, each party, fintech and payment provider, should establish what changes need direct approval. Your team may need consent to add an additional market or alter the business model. Where relevant, ask which upstream banks, acquirers or payment schemes the service depends on, and how changes to their requirements could affect you.
A fintech’s selected provider may need to restrict their services to comply with sanctions or payment-scheme rules. Make sure you have an appropriate notice period in the event of these changes, and escalation rights or transition assistance where they may be necessary.
Be sure to keep a detailed record of which organisation signs the agreement, which countries you will be serving, category of customers, and which payment flows the provider will accept. These records should include all supported currencies, settlement arrangements and payout destinations.
This information should be given to the product team so that they may set accurate eligibility rules and explain the service to your potential customers.
Give someone authority to act on a notice
When partnering with another organisation, it is imperative that your team understands each notice process. Who receives a notice, effective dates, and what information providers can supply to customers should be abundantly clear to each team member.
Not only is the information of these processes important, founders should ensure that the timeline of any notice period is achievable for their team. If providers are not able to assist in transition support, this should be factored into any potential timeline. For material discretionary changes, also consider a right to terminate without disproportionate exit charges.
Each facet of a fintech company is vital to its success with payment partners. Legal assesses the contractual position, compliance checks licensing, AML and sanctions implications, finance reconciles balances and reserves, operations establishes the status of live transactions, product decides whether to pause onboarding or remove payment options, and support creates careful explanations for customers without making grand promises. With so many moving parts, it is important to have one person in charge of coordinating these decisions and authorising the final response.
Without that clear authority, you run the risk of offering outdated services. Before launching, create a mock restriction scenario with a specific customer category to test your adaptability. In this mock situation, each role and responsibility should be clearly established across each team.
Follow through on payments you have accepted
When product teams remove payment options from your app and operations continue to handle previously initiated transfers, customers need a way to complete or resolve their payments. Replacement providers may not be able to resolve transfers from a previous providers.
Before signing any contracts, make sure a clear process is in place to trace transactions and reconcile balances after a restriction or termination. Each party should be in agreement on how to handle settlement cut-offs, reserves, refunds, chargebacks, and disputes before and after termination.
As previously discussed, each leg of the company has its own particular role in this situation. Legal should check continuing obligations, any applicable safeguarding requirements, and what legal limits might be placed on those arrangements. Support should explain the status of any existing transactions separately from the options given to a customer for new payments. Sharing with customers that you have found another provider may leave them feeling uneasy and wondering whether their money is safe.
During a partner transition period, you may need to stop accepting new business while your team completes or resolves outstanding activity. For example, if a provider stops accepting one merchant category but continues settling other customers, your fintech can only reroute new eligible transactions after the replacement provider approves – especially if those balances may still be held by the original provider. Treating future processing and existing funds as two separate problems prevents any promise of a seamless transition that your business cannot realistically deliver.
Test the alternative against the customers who need it
When establishing a relationship with a replacement provider, ask them to assess the customers and payment flows you would need to move. Depending on their answer, you may need to contract through a different entity, subject to their own regulatory and provider approvals or arrange further customer checks. Changing entities does not bypass any legal or provider restrictions.
Product and finance teams may need to change the payout journey or settlement arrangements. When establishing transition timelines, incorporate those tasks to ensure you can set accurate goals. An engineering team can complete an integration before the provider is able to approve the business. Check with both teams before treating the provider as a fallback.
Each team should confidently know which records they can retrieve from the outgoing provider and how long they can access those records after termination. The receiving provider may need to conduct their own checks, while your team must assess confidentiality, privacy, and cross-border data transfer requirements before sharing any customer data.
Fintech founders need to weigh the costs of keeping another provider ready against what interruption they are willing to tolerate. Those most concerned with critical payment flow may choose to maintain approved alternatives, although smaller operations may prefer to work with an ordered reduction of service. Each choice requires careful work through the consequences for existing customers.
Revisit the agreement as you expand
Before expanding to new markets or changing your customer base, review the agreements with your payment provider. They should confirm that your new goals are supported by their service, and your team should update contingency plans for any new customers.
Before committing to any partnership, your fintech team should be able to explain how they would handle a restriction affecting a customer with an unfinished payment. Whomever holds the responsibility for contacting the provider and obtaining transaction records should be aware of their vital role. It should be well established how operations will resolve outstanding activity, and how much support can share with customers.
From that explanation, you can then judge the work and expense required to continue serving customers or potentially close service. Termination clauses give you rights, but having a clear exit plan where each team member understands their specific role allows you to understand how you can use those rights.
