Warning: If you’re a merchant service agent who leases credit card terminals, you are not going to like my post. It’s not that I am completely against leasing equipment. I’m against small business owners being ripped off!

Please allow me to explain. A few years ago, I met a small business owner who was unhappy with his current processing company. He was ready to switch to our service until he learned that I could not get him out of his current lease.

He had a standard credit card processing terminal that cost around $300.00 new. He was paying $50.00 a month for a 48-month lease! The total amount of $2,400.00 for a terminal that I give away free to our clients.

Why Would This Happen?

The sales agent on this account probably made a $1,500.00 up front commission when the account was activated. Once a lease is signed, they are nearly impossible to get out of.

To make matters worse, sometimes when the lease ‘ends’ the company will keep billing the merchant unless they cancel the scheduled payment in writing!

So Never Lease?

Not necessarily. If your small business can function well with a stand-alone credit card machine then no, don’t lease. But what about point of sale systems?

With POS systems costing anywhere from $1,000 – $20,000 a lease may be a good option.

 

What to Consider:

Whether you should lease a credit card terminal depends on your specific business needs, financial situation, and preferences. Here are some factors to consider when deciding whether to lease a credit card terminal:

  1. Cost: Leasing a credit card terminal typically involves monthly payments over a fixed term. Compare the total cost of leasing over the term of the lease with the cost of purchasing the terminal outright. Sometimes, leasing can end up being more expensive in the long run.
  2. Flexibility: Leasing offers the advantage of spreading out the cost of the terminal over time, which can be beneficial if you’re a new business with limited upfront capital. Leasing may also allow you to upgrade to newer equipment more frequently without a large initial investment.
  3. Ownership: When you lease a terminal, you don’t own it outright. This means you may have restrictions on how you can use or modify the terminal, and you may need to return it at the end of the lease term.
  4. Contract Terms: Read the lease agreement carefully, paying attention to any terms related to cancellation fees, equipment maintenance, and upgrades. Some leases may have strict terms or penalties for early termination.
  5. Equipment Quality: Consider the quality and features of the terminal being offered for lease. Ensure that it meets your business requirements and is compatible with your payment processing system.
  6. Customer Support: Check what kind of customer support and technical assistance are provided by the leasing company. You’ll want reliable support in case you encounter any issues with the terminal.
  7. Business Growth: If your business is growing rapidly, leasing might offer the flexibility to scale up your payment processing equipment as needed without significant upfront costs.

Before making a decision, it’s a good idea to compare leasing options from different providers, as well as the cost of purchasing a terminal outright. Additionally, consider consulting with your financial advisor or accountant to assess the financial implications and determine which option makes the most sense for your business.

We do offer equipment financing and merchant advances if there is a need. Contact us to learn more.