"Where The Answer Is Yes!"
Sometimes, leasing equipment makes sense, and preserves cash flow - generally for big ticket items, which a credit card terminal is not. So if a salesperson offers one as part of their pitch... RUN! However, if they are in on the leasing, they may "forget" to mention it, so it is VERY IMPORTANT that you ask them about allcosts associated with your equipment. Ask them if they can reprogram your current equipment, or could they load their software on to a scrubbed terminal you will provide them. Be vary wary if they insist you must use their terminal. And don't be afraid to be upfront with them, and ask, "Is there a lease involved in working with you?" If you are the least bit concerned, download and use Questions To Ask Your Processor to flush out exactly what you will be charged. Or better yet, remember we will always review your paperwork for you (before you sign it please), free of charge or obligation, to highlight the benefits and pitfalls of the "deal" you are entering into.
Regardless, there are a lot of lovely, charming salespeople, who make it all sound so good, and use a lot of jibberish to confuse you. And while there is savings to be had, it is often difficult to understand if you've achieved any because the statements and fees are so confusing (this is not a coincidence). Some processors will offer you a "free" terminal. Let me assure you, the processor did not get the terminal for free, so someone is paying for it, and that someone is you; it's just built into the other fees you are paying - there is no free lunch. And often, in order to get your "free" terminal, you must sign up for some other program they offer. I offer my clients the option to rent, finance, or purchase outright their equipment; each option with its own benefit. You will notice I do not offer the option to lease the equipment.
I have run across many merchants who have been stung by leasing: many of them are now my clients. This is how they were stung. A salesperson stops in and offers them savings on their credit card processing. But, in order to get these alleged savings, they must use a particular terminal, which the salesperson will gladly provide. The merchant signs the paperwork, and unbeknownst to them, buried in the fine print, they are also signing a lease for this equipment. The monthly payment runs anywhere from $34.95 to I've seen as high as $89 per month, and the term is usually 48 months. This results in paying from $1,677.60 to $4,272 for a machine that retails for $300 - $400.
The saddest part is when I run their numbers, their rates and fees aren't anything great, and I beat them all the time, right out of the gate. And, whatever savings they may have achieved over the previous processor is surely offset by the new lease payment. Worse yet, even if they cancel their processing - often incurring an expensive Early Termination Fee (ETF) - they are still stuck with a hefty lease payment.
So what can you do if you've been stung? First, don't beat yourself up; you are a victim of an unscrupulous salesperson, who made a pretty penny off of the lease. Here is what others have done in this situation.
Be aware that you are breaking your lease. The alternative is pay the remainder of the lease payments, which is your prerogative. These companies count on, and prey upon the fact that you are an honest, and conscientious person, who pays their obligations. As always, check with your accountant or lawyer to review any planned action to make sure