For many merchants, leasing credit card machines and equipment is still commonplace. When a company first begins a commercial venture, it is usually met with a bombardment of telemarketers and sales people different firms that are offering their various products. Since any merchant must run their business with the acceptance of credit card transactions, some of these offers are going to be from merchant account providers. And, somehow or other, a company decides among them and opens a merchant account – because it has to.

New merchants usually have a tight schedule that they are trying to maintain. This can cause their lack of knowledge regarding the credit card industry to cost them money. Certain companies might try and convince merchants that leasing a credit card terminal is the best option for their business, and if they are not careful, new merchants may go along with the offer, especially as part of a “great” package deal. There are also a number of costs that merchants somehow always forget to budget for, like accessories, repairs, consumables (paper, ink) and extra battery packs for wireless models.

The Real Deal

The reality of the situation is that leasing a credit card terminal is far from the best deal for any new business. Most merchants prefer a simple swipe and print credit card machine that is able to accept the major credit cards and other popular payment cards. The merchants may enter this part of the decision-making process without having done prior investigation on the actual price of a new credit card terminal, and do not know the cost of a purchase as apposed to a lease. What they would find with a little diligence is that the outright purchase price of a new credit card terminal is normally quite reasonable and a lot less expensive, over time, than leasing.

A leased terminal that will cost a merchant thousands to own after all is said and done and the typical four-year lease is over, would only cost two to three hundred dollars to own outright from day one. For new merchants that are just starting out, money can be tight, especially when the business starts to grow and they need to make other expenditures. Any extra money that is spent on leasing a credit card terminal is money that can be better used for other purposes.

Hidden and Unexpected Costs

Leasing credit card terminals and equipment might still make sense in certain situations. However, it should only be considered when the actual price of the equipment is very high, and/or the equipment is likely to be upgraded frequently. Wireless terminals, while becoming more affordable, can still be a considerable investment. Wireless terminals can still cost up to a $600-800 or more, which is a large sum of money for any small company. Leasing a wireless terminal solves the initial outlay issue, but business owners should still be aware that they would pay more than the cost of the terminal in the end.

A merchant should expect that leases always come with some sort of hidden costs. The lease may specifically not cover repair or replacement, and it most certainly does not pay for your receipt paper if it has a printer built-in. Neither will it clean its own card reader, so you will be buying special items to do that. In other words, watch out that you don’t get “nickel and dimed” to death with unexpected, and unbudgeted, costs. Even trying to get out of a lease may cost you, since most lease contracts will not allow you out of the lease early. If your decide to terminate, you will most likely have to pay some sort of cancellation fee, which can be costly, adding even more expense to a losing proposition.

The Finest Fine Print

In fact, leasing does not always result in the merchant owning the equipment, and even the best lease could have a costly buyout agreement at the conclusion of the term. That is something many merchants either don’t pay attention to or forget over the years of the lease. And take care with all the fine print, as some leases are even designed to start over at the end of their term, with the business only getting a certain amount of time (usually short) to notify the leasing company of their desire to return the equipment. Know what you’re getting into.

Businesses should always be aware of the all the terms concerning a lease before they decide to “sign on the dotted line.” Signing a contract without a complete picture of what is involved in it, and without comparing the cost of leasing with purchasing, can be an expensive error. Merchants need to invest the time to find out the facts beforehand, as with any other business decision. There is no such thing in business as a “little” waste – every wasted dollar looms large when a business starts to have trouble. Don’t let unnecessary expenses, such as a bad lease or your failure to budget for needed accessories and supplies, contribute to your problems. You have enough to worry about already, right?