The FTC says cancelling Toast can mean repaying its loan in one go.

Toast sells restaurants their POS, processes their card payments, and lends them money through Toast Capital. Toast says around 180,000 restaurant locations use it, most of them in the US. It also sells in the UK and Ireland.

Last Thursday, 29 October, the US Federal Trade Commission sued Toast, joined by seven states and two California authorities. The complaint alleges hidden fees, add-ons restaurants didn’t agree to, and a cancellation process the FTC says keeps them paying for months or years after they want to leave. Toast strongly disputes it and says the subscription law the FTC is relying on doesn’t apply to negotiated business contracts. None of it has been tested in court. Yet.

The complaint also sets out how hard it is to leave. To cancel, a restaurant has to give 30 days’ written notice of its intent not to renew, which the FTC says isn’t made clear at sign-up. Early termination is alleged to cost $150 for every month left on the contract. One owner was charged $5,318.87 when he cancelled after four years.

Then there’s the loan. Toast Capital loans are repaid as a fixed percentage of the card sales a restaurant processes through Toast. Take a bank loan and they don’t care which POS you use. If you switch, you keep paying it back as agreed. According to the complaint, Toast treats cancelling or moving to another provider as a default and asks for the whole balance at once. So the choice becomes keep paying for a system you want to leave, or find the full loan amount on top of the termination fees.

That’s what embedded finance can look like for operators. It’s sold as convenience, a loan from the people who already see your revenue. But the lender is also your POS vendor, and the loan becomes part of the contract. According to the complaint, about 82% of Toast’s 2025 revenue came from payments and loans.

Toast also promises “24/7/365 support” in every package. The FTC says customers struggle to reach anyone. One owner called on a Saturday and was told the team that could help didn’t work weekends, which the complaint says cost him thousands of dollars in card transactions. If you can’t get help and can’t afford to leave then you’re stuck.

Two weeks ago I wrote that operators should agree exit terms before they sign. This is why. Read the contract and any finance agreement together, and ask one simple question: what does it cost me to leave in year two? If the answer involves a loan being called in, it isn’t just a POS decision any more.

This case is US only, and UK contracts sit under different law and may look quite different.

For founders and investors there’s a second question. How much of a platform’s retention comes from customers choosing to stay, and how much from what it costs them to leave? A regulator is now testing that in court.