Is Your Credit Card Terminal a Cash Drain?
Many new business owners make the mistake of either leasing a credit card terminal or renting on a monthly basis. When faced with the costs of opening a business, the thought of spending another $300 for a credit card machine can be daunting. However, when presented as a rental or lease with payments “as low as $20” a month, it can seem quite attractive. It can be especially attractive when you forecast running $50,000 a month on the machine. What’s $20?
However, at the end of 15 months, you have paid for the machine’s cost. Most merchants never look for this line item expense on their monthly statement and as a result can go years without noticing that they are leasing or renting a terminal. Are you in that same boat? You should probably check. Sometimes in the process of welcoming a new client to Chosen Payments, we will discover that they have been leasing or renting a terminal for more than five years. Over that time period, they spent more than $1200 on their credit card processing machine.
Here are three tips to help you avoid the dreaded cash drain:
#1 – Do the math! Look up the retail price of the suggested terminal. If the total amount of lease payments exceeds the cost, buy the terminal outright, even if you have to put it on a credit card and pay for it over time.
#2 – Never engage in a “lease to own” scheme. You will pay for the terminal TWICE. At the time of the buy-out, you will likely pay a fee that would have cover the cost of the terminal if you bought it up front.
#3 – Buy the right terminal for your business. What is important to you? Is is ease of use, speed, wireless, a hand-held model or innovative features? Don’t settle for any credit card processing terminal. You will likely have it for a long time and researching the capabilities of a terminal should be included in the decision making process.
#4 – Make sure there is no termination fee on a lease or rental before you sign a contract
Speaking of cash drains in credit card processing, if a Merchant Services Provider offers you a free credit card processing terminal, you will pay for it somewhere else. The companies that make them do not give them to credit card processors. They sell them. If the processor gives it to you free, it is likely paid for by inflated processing rates that will remain in effect as long as you are processing with that processor. Your best bet is always to simply buy the credit card processing terminal that is right for you.