8-3 Price Gouging on Credit Card Machine Leases

Price Gouging on Terminal Prices and Leases

Credit machines and terminals are often sold at ridiculously inflated prices. You should pay between $300 and $500 for a new all-in-one printer/terminal combination when opening a new merchant account. Within roughly the past four years, competition among merchant account providers has driven the price of credit card machines down, but some sales offices are still holding onto the belief that they can charge as much as a 500%+ mark up on credit card processing equipment.

Unfortunately, many providers are getting away with charging such high prices for equipment. The sales offices that are having the most success with terminal price-gouging are local sales offices that actually send a representative out to meet with business owners. If any of these business owners were to take a look around the Internet, they would quickly realize that they can buy a terminal for a much lower price than what is being pushed upon them by the sales representative they are meeting with.

If you have found a merchant service provider that offers low rates and fees but charges too much for equipment, simply purchase a terminal elsewhere at a lower price or bring the other offers that you have found to the provider's attention and ask that they match the lower price. It is not uncommon for a provider to drop hundreds of dollars off of the cost of a terminal in order to match the price of a competitor.

Terminal Leasing - Do not lease credit card machines. You will end up paying five-times what the terminal is worth over a period of three years or more. When electronic credit card machines and terminals were in their infancy, they were very cost-prohibitive to purchase even for large businesses. Now that the technology has been around for a while, and new manufacturers have entered the market bringing prices down through industry competition, there is no reason to lease credit card machines.

Merchant service providers make a lot of money off of terminal leases, and many providers still push merchants to lease equipment whenever possible. The truth is that there are no longer any benefits to leasing credit card equipment, and simple math can explain why. For example, a merchant service provider may offer a terminal on a 48-month lease at $29.99 a month, and sell the same terminal for $349. If you were to lease this terminal you would pay $1439.52 over a period of four years when you could have purchased it for $349.

Some providers will claim that the terminal is covered under warranty during the lease period protecting the merchant from replacement or repair costs. Going back to our example you can see that a merchant would have to replace this terminal over four times in order to make the lease option more cost-effective. Do not lease credit card processing equipment no matter how hard the merchant service provider or sales person pushes it.

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