Leasing vs. Owning Your POS Terminal

Point of Sale TerminalPOS Terminal simply stands for Point of Sale Terminal, it’s a fancy way saying credit card machine or debit card machine.   The questions we will be addressing in this article is:

“Is It Better To Lease or Is It Better To Buy Your POS Terminal?”

When the banks deregulated the Merchant Services for business all over North America, there was an influx of new providers (mainly ISO’s and member bank providers) who were re-vamping their systems to be competitive!

This was no longer just business potential for the banks, now everyone had a fair shot at being able to establish merchant services for all kinds of business.  So, keeping in mind the true costs associated with this service, companies were coming up with money saving systems to gain merchant’s business.  Before all of this, you were renting your POS machine from the bank, with no options, for an indefinite amount of time at whatever price they gave you.  But when de regulation happened, the deals and options started flying!

One way these new service providers were going to switch merchant’s from their bank service was to offer an alternative to “never ending” rental agreements.  These providers came out with the options to Lease or Buy your POS terminal, so that merchant’s were no longer wasting money on rental fees if they didn’t want to.  There are many advantages to Leasing or Owning your terminal.

Leasing your machine is just like any other industry standard lease.  The payments are made monthly and eventually end depending on one’s agreement.  This is great because it allows the merchant the saving of not having to rent, but also the ease of making a small monthly payment working towards out right ownership.  Lease is non committal at the same time, one can always (or should be able to) transfer the lease (equipment) to another business or owner so that there is always an “out”.   As well, lease payments can be encompassed into a business’ monthly expenses, so it can even help to reduce costs.  Most importantly and what I like best about the leasing option, is that even Poor Credit or no credit merchant’s can be approved.  Paying this lease will help to build a person’s credit back up from despondency, as it is looked upon in the financial world as any other lending/credit situation in that if you make good on your payments, it will be reflected on your credit score and help build it up!

To purchase your machine outright also has benefits.  Firstly, one can easily chalk up the purchase as a business expense, and right the whole thing off.  There is no worry of a monthly payment; the terminal is yours and going forward the only fees would be those bare minimum fees from your provider like usage and statements.  The great advantage in a purchase is that even though you only pay for it once, you are still subject to the same service, updates, warranty’s and discounts as someone who is leasing or renting!  And that is for as long as you are processing with that company.

Math is the most important thing to consider (try our free lease calculator).  A business has a budget, some can afford the one time fee, and some can only afford the monthly costs.  The most important thing to take away with you is that we have the options! For an industry that was closely guarded and under control of a small group of companies, it is great that the customer wins in this industry, the contracts and competition is out there so do what is best for your financial situation and your business.

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Matthew Hunt has been helping small businesses get set-up with Canadian Merchant Account Services since 2007 and helped 1000's do so. Join Matthew on Google+.

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