How To Get A Credit Card Machine For Your Small Business: 4 Smart Alternatives To Leasing

Getting a credit card machine for your small business can be tricky. There are many options with different features and prices. Even if you’ve already found a good merchant service provider, you’ll still have to pick the best device that can meet your day-to-day processing needs.

In this article, we’ll discuss the best ways to get a credit card terminal for your small business and explain why leasing a credit card machine is always a bad idea.

The 4 Best Ways To Get A Credit Card Machine For Your Small Business

Options for obtaining a credit card machine for your business generally come down to either buying one outright or paying for one on a monthly basis. Let’s consider the pros and cons of each method:

1. Buy Your Credit Card Machine Outright

The easiest way to equip your business with a terminal is to buy one.

We recommend purchasing your terminal directly from your merchant services provider. They’ll come pre-programmed to work with your provider’s processing network and may include a guarantee or insurance plan to protect your equipment.

You can sometimes purchase your credit card machine from a third party, often at a lower price.

However, the terminal will need to be reprogrammed to work with your provider. While some providers offer this service for free, others charge as much as $100 per terminal.

You’ll also want to select a terminal that’s compatible with your provider’s network, as not all terminals are compatible with every provider.

2. Reuse Your Existing Processing Hardware

If you already have an EMV-compatible terminal from your previous provider, the easiest (and usually least expensive) option is to keep it and have it reprogrammed. Don’t forget to check with your new provider to confirm compatibility and to make sure this option is available.

Reprogramming a credit card terminal involves installing new firmware (called a “software load”) onto your terminal. It can be accomplished in person by a sales representative or by shipping your equipment to your provider for servicing.

Terminal reprogramming typically costs around $100 per machine, although the more ethical providers will perform this service for free.

3. Finance Your Purchase With A Small Business Loan

If you’d like to buy your equipment outright but are worried that the cost is too high, consider financing your equipment purchase with a small business loan or a merchant cash advance rather than pay for everything all at once.

This can be a particularly good option for a new business that needs multiple terminals right away.

Although you may end up paying interest on top of the price of the equipment, you’ll still save a significant amount of money over leasing, and you’ll actually own the equipment when you’re done paying off the loan.

4. Rent Processing Hardware From Your Merchant Services Provider

In response to all the negative feedback that leasing has generated, some companies now offer the option to rent your equipment instead. You’ll still have to pay a monthly payment, but there’s no long-term contract, and you can return your terminal at any time with no penalty. This is actually a reasonable alternative for some businesses, especially new startups.

If you’re just launching your business and choose to rent, you should consider dropping your rental agreement and purchasing your equipment once your cash flow can support doing so. Renting a credit card machine may also require buying a suitable insurance/replacement plan, so consider the total cost if you’re thinking about this option.

Also note that in Canada, EMV-equipped terminals cannot be easily transferred or resold, so renting is often your only choice.

Why Leasing Is The Worst Option For Financing Credit Card Machines

Of all possible options for obtaining your processing hardware, leasing is invariably the worst one. Leasing requires no up-front costs, and this makes it very tempting if you’re trying to minimize expenses. However, over the life of the lease term, the total cost of a lease far exceeds the cost of buying your equipment outright.

The Pros Of Leasing A Credit Card Machine

Spoiler alert: There are none! But leasing company sales agents will certainly try to argue that it has many benefits.

Unscrupulous sales agents have a number of misleading arguments in favor of leasing, but none of them hold up to the slightest scrutiny:

• Yes, you can get into a lease for no money down. That’s hardly worth it when your total cost over the life of your lease is much more than what the equipment is worth.
• Yes, the lease payments are tax-deductible. You can just as easily write off the cost of buying your equipment, and you won’t be getting ripped off in the process.
• Yes, you’ll get equipment insurance and upgrades with the lease. However, the overwhelming feedback from merchants that we’ve seen indicates that you’ll receive little or no support from the leasing company if you have a problem.
• Yes, you can upgrade to newer equipment. Unfortunately, you’ll usually have to sign a new lease for the replacement model. This will inevitably cost you more per month and extend your obligation under the lease even further.

How Much Do Credit Card Machines Cost?

The cost of obtaining a credit card processing machine varies. Even the same model can have very different prices, depending on where you buy it.

Unprogrammed terminals purchased from major online retailers are usually the cheapest, but you might have to pay for reprogramming when you take it to your new merchant account provider.

Optional equipment insurance also adds to your overall cost.

The prices listed above only reflect the costs of obtaining a basic credit card processing device. Depending on your needs and your provider, there may be other costs as well. Debit card PIN pads, cash drawers, and even paper for your receipt printer add to your total cost of ownership. If you need multiple terminals for your business, the initial cost to purchase all of them can be significant.

Is The “Free” Credit Card Machine Too Good To Be True?

Equipment leasing has become so unpopular that many providers have moved away from the practice altogether. Instead, many providers now offer a “free terminal” with your account. Because nothing is ever truly free in the processing industry, you should expect to pay higher processing rates, higher monthly account fees, or even both in exchange for that “free” terminal.

Here are the downsides of accepting a free credit card terminal:

Comes With A Contract

Most providers offering “free” equipment usually give you a choice between buying your equipment outright or including a “free” terminal with your account.

If you buy your own equipment, you’ll be on a month-to-month contract with no long-term commitment and no early termination fee (ETF).

However, if you choose to take advantage of the “free” terminal offer, you’ll have to sign up for a long-term contract—typically three years—and accept an ETF as part of your agreement.

While this is a more equitable arrangement than leasing, we still believe that, in most cases, you’ll be better off in the long run if you buy your own equipment.

Not Yours To Keep

Another consideration is that the “free” terminal is not yours to keep.

The company will allow you to use it for as long as you keep your merchant account open with them, and you won’t be assessed any additional fees to do so.

However, if you close your account for any reason, you’ll need to return it immediately to avoid being charged the full value of the equipment (often at a highly inflated price).

You Only Get One

You’ll also receive just one terminal with your merchant account, so if you need multiple machines, you’ll have to open additional accounts for each extra device and pay the full schedule of monthly and annual fees for each account.

While we don’t categorically recommend against accepting “free” terminal offers, we do encourage you to approach this kind of offer with a healthy degree of suspicion and consider whether it will really save you money in the long run.

Which Option Is Best For Getting A Credit Card Machine?

Unless you’re operating in Canada, buying your terminal outright is your best option in most cases. If you’re switching processors and already have a terminal, check to confirm that it’s compatible before considering new equipment. Even if you have to pay a reprogramming fee, it will cost a lot less than buying new equipment.

In choosing a merchant services provider, we encourage you to look at complaints filed against them online—the BBB is a good source of these. While not all complaints are valid, you’ll usually find a pattern of charges against those providers who actively push equipment leases on their merchants. Misleading sales practices and failure to disclose the terms of the lease are common complaints from merchants who were tricked into agreeing to a lease.

Need some specific recommendations for credit card processors that let you buy your machine outright, and at a good price? Check out our list of the best credit card processing companies.