Free terminal for you? Or, free overhead for your processor?
Every now and then, I still hear stories of merchants who get duped into signing agreements for eternally long merchant services contracts, unresponsive service, and–my favorite–credit card terminal leases. Terminal lease agreements are really something to behold because we’re talking about a very inexpensive piece of machinery here–$200, maybe $300 for a really nice, sleek-looking one. Right away, you know that if you plan to stay in business longer than 1-2 years, paying $15 per month doesn’t make any sense. And that’s just a small aspect of this terminal business. As humans, we make bad financial decisions when circumstances aren’t perfect, and some salespeople unfortunately make a killing off getting you to make a bad choice under pressure. And, while we’re on the subject of bad choices…have you heard the expression “free terminal” before now?
The truth about free terminals…
It’s important to think about why a merchant services provider would offer free machinery to its prospective clients. It’s not the same as something intangible, like a cloud-based software package or virtual gateway; while software developers put in the time and expenses into developing their product, there comes a time when the developing company will break even–or, simply offer their software product for free as a benefit. With physical card readers, however, processors do not stand to benefit in the slightest by offering free terminals, especially not as a way of enticing merchants into signing up. It’s for this reason that so, so, so much of the time, you’ll find that free terminals are accompanied by a thick merchant services contract. Usually for 36 months. And, it probably stipulates that if you decide to end your agreement before 36 months elapse, you pay for the value of about ten of those lousy terminals or the fees for your highest-volume month multiplied by the number of months left on your agreement, whichever is worse. In fact, I’ve never heard of a company that didn’t offer free terminals without some sort of string attached to the offer. Terminals are tangible items, so they always carry a cost. Processors aren’t total goof-offs–they usually find a way to pass the charge onto you. If you choose to fulfill your contract, you might not see the ugly side of the agreement–and, you may really get free machinery–but, brace yourself if you anticipate batting an eyelash at that contract.
The solution to ostensibly free terminals? Try a guaranteed non-free one, or don’t try one at all.
I try to play devil’s advocate whenever I can, so I don’t want to tell you to avoid free terminal offers at all costs. If you’ve found a deal that really is wonderful and a merchant services provider that is either that loyal to you or that scared to lose your business that he offers you free machinery–and, if machinery is the best way for you to accept your card payments–I say go for it. Everything else aside, wholesome relationships are hard to find, especially in business. Especially in credit card processing.
However, if you’re the least bit uncertain, get away from that free terminal before you put pen to paper. Go online and search for the brand of terminal you like, fork over the $250, and get your terminal in the mail next week. Never pay for a machine again. Refuse to do business with anyone who makes you purchase or lease their own machinery instead of letting you use your own.
And, furthermore, if you’re feeling innovative, consider that using a physical terminal might not be the best processing solution for your business at all. Online virtual terminals don’t take up space on your desk and are designed to provide reporting and searching tools to businesses who need that sort of functionality. They generally don’t cost any more than a physical terminal to use, and, in some cases, they can give businesses a lower base cost on business-type credit cards. Depending on your dollar volume of transactions per month, you could save a substantial amount of money by conducting business that way instead of through a machine. You might consider choosing a merchant services provider that offers a solution that really fits your business.
Hopefully you learned something interesting from this (or you were at least entertained)! Of course, it’s one thing to be told something by someone you don’t know and quite another to have experienced it firsthand, but, you know what I always say… If you don’t believe me, go out and try it and tell me how it goes. Hopefully you don’t subject yourself to one of those free gags and I see you before 36 months, though 
Take care,
Jeremy
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