Leasing a credit card terminal, is this a good idea for a business owner? Most of the time, this is a bad idea, because there is no other option provided to the business owner.

Here is why leasing a credit card machine is bad idea. You usually pay 3-4x more than if you bought the terminal and paid cash, and that is a “reasonable lease”. The lease is non-cancellable and typically for 4-5 years on average. The sale of the merchant account is based solely on leasing a terminal, not the actual merchant account. Let’s expand on these 3 pitfalls of leasing a credit card terminal.


Cash prices range from a few hundred dollars to maybe $800 to buy a credit card terminal. Let’s take the middle and say a fair price is $600. So pay $600, plus some tax, so $648 @ 8% tax rate, and you own the machine. The same machine on a lease, which you may find at a large bank, $34.95 for 48 months plus tax; it’s yours, plus the buyout. Assume 8% tax, plus insurance $5 per month, your actual payment is $42.75 per month, times 48 payments (months), total for the machine $2,052. That is over $1,500 more than paying cash for the same machine. So what would you do with the extra $1500, marketing, rent, a bonus?

This example is a real example, and is considered a reasonable lease. However, now days, these leases are being hidden in the processing contracts. We have seen too many companies with 5-7 page agreements or more and the lease tucked into the credit card processing agreement. These are typically, terrible leases. We have seen $299 per month, for 60 months. Without insurance or tax or buyout to keep it, $18,000 for a single credit card machine!


That is right, you cannot cancel a lease on a credit card terminal, and most require a personal guarantee. So if your business closes, is sold, or something else, the leasing company will come after the person who personally guaranteed the lease. So read your agreements and make sure there is no lease. A legitimate lease will be a separate document with its own terms and conditions. If a leasing company calls to verify a lease, be certain you know what they are doing. Once the lease is verified and the terminal is working, you and your business are on the hook for the payment and term.


Many times, we have seen “cost savings estimates” from these high dollar lease companies, completely overestimated. One actually said in the fine print, “these are only estimates based on pin debit transactions”. The transactions were credit cards, no pin number possible. So, if someone is showing you and your business a large savings or even $100 per month, but there is some type of equipment fee, that is probably a lease. Get some references at least 3 and call them. If credit card processing is important, take some time to check out what is being told to you and validate it.

We at DonUp will only lease a credit card machine to our clients as a last option and all equipment comes with our “Infinite Warranty” sm. If you would like more information about how we handle equipment, click here.