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Credit Card Terminals – Better to Lease or Buy?

Thumbs Up or Thumbs Down-Is it better to lease or buy credit card terminals?I don’t believe in paying any more than I absolutely have to for a product or service, nor do I like to see good people being taken advantage of. Like most, I am willing to pay what is fair and reasonable, but when I see certain companies taking advantage I get upset. That’s why the credit card terminal lease proposal I recently reviewed nearly sent me to the moon!

A start-up business I’m working with required the use of a wireless credit card terminal. The owner had done some shopping and asked me to evaluate the competitiveness of the proposed merchant services fees and equipment leasing costs. The merchant services fees were reasonable (but not great); it was the equipment pricing that caught my attention.

The merchant services provider proposed the use of a Nurit 8020 wireless credit card terminal. Here is a summary of the lease options (not including tax) in the proposal:

Pricing Model Est. Monthly Est. Annual
Monthly Lease Payment $49.99 $44.99 $39.99
Total Cost
[over term of lease]
$1,199.76 $1,619.64 $1,919.52

No purchase price was quoted by the merchant services provider so it was time to do some research. I obtained price quotes from several credit card terminal suppliers for a brand new Nurit 8020 wireless credit card terminal as well as a used/refurbished one. Here’s what I found:

Leasing vs. Purchasing Total Price
Leased Nurit 8020 [24-36-48] $1,199.76 - $1,919.52
Purchased Brand New Nurit 8020 $524.00 - $624.00
Purchased Used/Refurbished Nurit 8020 $324.00 - $424.00

By entering a 48-month lease instead of purchasing a used/refurbished credit card terminal, this business owner would waste nearly $1,600! Rather than pad a salesperson’s pocket, those precious funds could be more wisely invested in profit generating activities.

In further studying this equipment lease proposal, I noticed that vital pieces of information about the lease were absent.

  1. Down Payment Required? Some credit card terminal leases require a down payment. Others do not. But in any case, this should be spelled out in the proposal and not left to chance.
  2. Lease to Own? Some leases are more like rental agreements, meaning that the merchant doesn’t end up owning the credit card terminal at the end of the lease.
  3. Lease Buyout Options? Sometimes credit card terminal leases will include buyout options that are as expensive as purchasing a new terminal. On this proposal, the terms and conditions of the lease were not disclosed.

Clearly it is more cost effective to buy rather than lease a credit card terminal. To determine for yourself whether it is better to lease or buy a credit card terminal, answer these eight questions:

  1. What is the make/model # of each piece of equipment I need to process payments?
  2. Is there an alternative make/model of equipment that offers the capabilities I need at a more reasonable price?
  3. What is the total purchase price of the payment processing equipment?
  4. Is the purchase price I have been quoted competitive? (Shop it around)
  5. Is it a “lease to own” arrangement?
  6. Is there an early termination penalty?
  7. What is the cost to buyout the lease at the end of its term?
  8. What is my total cost of ownership if I lease the equipment? Calculated as follows: Down payment + (Monthly lease payment x Length of Lease) + Cost of Lease Buyout

What about Free Credit Card Terminal Programs?

There is nothing free about “free” credit card terminal programs. In reality they will cost you hundreds of dollars in extra fees each and every year. Don’t be swayed by the siren song of a free terminal. See why free credit card terminal programs are bad for your bottom line.

Think Simple First

Simple has generated thousands of dollars in annual cost savings for businesses. Our comprehensive cost reduction analysis is performed on contingency, which means Simple is compensated only if cost savings are identified for your business. Imagine what you could do with all that money added to your bottom line…

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