From the blog Why You Should Not Lease Point-of-Sale Equipment

When establishing a new merchant account, purchasing POS equipment may seem expensive.  Prices can range from a few hundred to several thousand dollars depending on the sophistication of the equipment, and business owners who have not considered or budgeted for those expenses might be tempted to look for ways to avoid defer the costs.  Merchant sales groups know this, and they use it to their advantage by offering to lease equipment or give it away for “free” in order to win new customers.  While this gives businesses the impression that they are getting a good deal, the sales group can significantly profit off this decision. 

A standard, EMV enabled, countertop credit card machine costs a few hundred dollars, but we often see businesses getting charged $20-$30 per month to rent the same make/model.  , Leasing groups will happily charge businesses that monthly fee for the 5+ years for the entire lifetime of their agreement.  By year three at $25 per month, a business would have paid three times the actual cost of the terminal in rental fees.  Furthermore, if the machine is ever damaged, lost, or stolen, the leasing group will typically charge the full price of the unit to replace it.  And if a business wants to change merchant service providers, the equipment cannot be reprogrammed for reuse on a new processor.  Countertop terminals and POS equipment can often be swapped out, so purchasing equipment from the beginning gives businesses the flexibility to migrate their merchant account without the need to re-purchase or re-rent new equipment.  Sales groups pushing for a lease will often claim that it will “future-proof” the business; new technology can make a terminal obsolete, and the sales group will upgrade your equipment for free when needed.  The reality is most modern terminals will remain legitimate for the foreseeable future.  “Upgrades” will likely take the form of software updates to the machine vs completely new hardware. 

Businesses should also be leery of sales groups that offer free equipment as an incentive to sign up for their services.  This is often a ploy to help ease the barrier to entry, at which point the sales group will charge excessive ongoing processing fees that will more than make up for the costs of the equipment they allegedly gave away.  Now, the business could be locked into a high-priced contract with punitive termination fees.  For any merchant account, ongoing processing costs will likely dwarf what a business pays for its POS equipment.  Thus, it is important to understand all contract terms and not fall for cheap sales tricks.  So, before you sign up for a service simply because they are offering to reduce your startup costs, consider why that might be.  Purchasing your POS equipment is often less expensive and gives businesses more control in the long run.    

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