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  • Writer's pictureDeeAnn Bennett

"8 Reasons Why You Shouldn't Lease Credit Card Terminals"



Although the title of this blog may be self explanatory, let me explain who my audience is on this particular post. I am not speaking to my competitors who choose to lease credit card terminals to business owners. If my competitors choose to do that, it is obviously their choice but it's never been a choice I've made in the 14+ years that I've been setting up and servicing merchant accounts. I truly don't believe in leasing credit card terminals and here are the 8 reasons why:


1. There is something called Google and many people use it to compare the costs of things. I know when I go to buy something, I compare the costs and nothing is worse than finding out that you leased a $150 credit card machine at $35 a month X 48 months! Talk about feeling ripped off, leases are the worst offenders of this.


2. It's very expensive. I know I'm stating the obvious here but even if you were to "only" get bamboozled into a 48 month lease at $35 a month, your $150 credit card machine just turned into a $1,680 cost.


3. You can't cancel a non-cancellable lease. Much like leasing a car, once you sign the lease agreement, you are pretty much stuck with it. That's why non-cancellable leases are the worst of their kind! Really, the only thing you can do is close your bank account that the leasing company is taking your lease payment from, but then you will most likely be sent to collections and your credit score will be affected.


4. If you sell your business, whoever buys it will most likely not want to take over your lease. If you still have months or years remaining in your lease term, your only outs are: transfer the lease to the new owner of your business, pay a balloon payment to buy out the lease OR keep paying the lease payment until the term is complete. But honestly, who wants to keep paying for a credit card terminal after they've sold their business??


5. The leasing industry is very lucrative for the leasing companies as well as the sales reps who sign you up for a lease. Once again, stating the obvious here, but sales reps who lease credit card terminals can make anywhere from $500 to $1500 per terminal depending on the length of the lease and the monthly payment they give you.


6. In addition to a monthly lease fee, you will also pay sales tax and sometimes a monthly equipment insurance fee. For example: Let’s say your sales rep leases you a terminal for “only” $35.00 per month. If you add in $5.00 per month for insurance and 8% sales tax, you’re actually paying $43.20 per month. If you multiply that by 48 months, the true cost of your $150 terminal comes out to $2,073.60!


7. Leasing costs are no more tax-deductible than an outright purchase. Don't let a pushy salesperson tell you that you can write off a terminal lease on your taxes but not a purchased terminal. This is completely untrue. No amount of tax write-off is worth paying 10 to 13 times more on a machine that costs $150 to purchase, right?


8. Most representatives will lease you a proprietary machine. If you are leased a propriatary machine, this means that your machine will only work with one processing network. For example, if you lease an FD130 terminal, that terminal will only work on the First Data network. It will not work with other processors, so you are stuck having to buy new equipment if you want to work with someone besides First Data as your credit card provider.


In closing, I would say that leased equipment is STILL something I come across often. Not only are my potential clients in leases on stand-alone credit card machines and pin pads but many of them are leasing Point of Sale systems too. Almost all of the above points can apply to a lease on a Point of Sale system too. The only difference is that Point of Sale solutions are much more expensive than a $150 terminal but many of them can be affordable and can be purchased outright.


At Ark, we are always happy to recommend the best non-proprietary credit card machines as well as non-proprietary Point of Sale Systems. There are MANY alternatives out on the open market, just ask us! DeeAnn Bennett is the President of Ark Payment Solutions and a 14+ year veteran of the merchant services industry. You can reach DeeAnn at 702-257-8295 OR info@arkpaymentsolutions.com.

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