Why POS Terminal Rentals Might Be Right for You

We get a lot of questions surrounding the acquisition of terminals.  And rightly so: it’s a little confusing trying to decide whether POS terminal rentals or a purchase agreement is the right one for you.  What you shouldn’t do is compare the process to buying or leasing a vehicle (of which I’ve made many analogies).  The principles are not the same and it’s important you understand the responsibilities behind owning a terminal before making that decision.

Renting vs. Owning POS Terminals

Many smaller ISOs (Independent sales organizations)  will offer smaller merchants the option to buy their terminal as opposed to paying a monthly rental fee.  And on the surface, this seems like a very attractive option.  The terminal costs are usually around 400-500 dollars.  If you take the average rental fee at around $40 a month, you’ve effectively paid for your terminal after one year.

But what happens after you own the device?  Well, the onus now becomes yours to ensure that you are always compliant with the rules and regulations set forth by the card associations.  Card associations (Visa, MasterCard and Interac) have a set of rules that are in place to ensure that cardholder data is safely processed.  These rules are typically the ones of PCI (Payment Card Industry) and carry hefty fines should they be compromised.

Advantages to POS Terminal Rental

When you rent a terminal from your Acquirer, it is your Acquirer’s responsibility to ensure that your POS is always up to date and in line with the latest set of regulations.  Should any rules change or become amended (and they are on a regular basis as fraudsters find new ways to compromise devices), your Acquirer is responsible for swapping out that terminal.  If you own the device, it is still the Acquirer’s responsibility to ensure your device is up to date (however, now the cost is yours to bear).  So if your device needs to have a software update, you will need to pay for the update itself and any costs associated with it, such as having a technician come onsite to perform the download.   This could account for a couple hundred dollars each time.

As well, if your device breaks and malfunctions, if you’ve purchased the device, you’ll be require to pay for service and perhaps the cost of a new device in order to replace.  In rental agreements, your replacement and service costs are covered in the monthly fee.

Renting a Terminal Leaves the Updating Responsibilities to the Acquirer

Another thing to consider is the constant changing of technology that we’ve been seeing in the payments industry over the last 5 years.  Change is happening at a rate that’s never happened before.  New technologies like contactless, EMV and mobile are emerging every couple of months and your device needs to be able to support these services if you don’t want to disenchant your customers.  Let’s face it, once a customer becomes used to a certain technology and relies on its convenience, once they are not able to use it, they can become rather unsatisfied.  Unsatisfied enough to choose another merchant that does offer that technology.  And again, any upgrade in technology will require either a software or a hardware update.  And again, if you own the device, those are your fees to bear.

So while you may be saving some money by purchasing the device for the first year, it stands to reason that you’ll likely be paying more at the end of the day by choosing POS terminal rentals.

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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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