Leasing, Buying or Purchasing a Credit Card Terminal

One thing is certain! Whether you decide to lease or purchase, you cannot do without Credit card machines. Credit Card processing equipment helps process credit card payments safely and efficiently. Additionally, the customers are provided with a much-needed flexibility of shopping with plastic money!

Once the necessity of acquiring a credit card processing terminal has been established, merchants may come face to face with the dilemma of choosing between leasing or buying a credit card processing terminal. Even though paying a small lease amount monthly may not prove to be a burden on the pocket, merchants often end up paying two to four times the upfront cost of purchasing the same equipment. Here’s an example- If you choose to lease a $ 500 credit card terminal for $30/month for 3-4 years, at the end of the lease term you would have paid $1,440 in lease, which is nearly triple the cost price of the equipment.

Having said that, I do not claim that purchasing credit card equipment works for all merchants. On the contrary, there are some factors that must decide the way to go in acquiring your credit card processing machine:

Cash flow- If you have the money available, purchase suitable credit card machinery without a second thought. However, if coughing up a lump sum for a machine would adversely affect your business, choose to lease the equipment, even though it will cost you more in the long run. Perhaps when your business is well-established you can buy out the leased equipment.

Tax- If you’re leasing the equipment, you will be able to deduct the interest portion thereof from your taxable income each year.

Legal Owner-To become the legal owner of the credit card equipment, you have to make a purchase. Leased equipment, even if used for several years, with monthly lease payments having already exceeded the value of the machine, does not give you a legal title over the equipment. It is a good idea to agree for a 'purchase option payment' at the end of the lease term in order to acquire actual ownership of the swipe.

Financial liability- If you’re leasing your credit card equipment, please remember that this would appear on your financial statements as a liability.

The above factors must be considered when deciding between leasing or purchasing credit card equipment. Once you’ve read through the above, do take out time to verify the cost involved in purchasing a credit card machine. That’s because, with time, the price of credit card equipment has dropped. Today, you can find equipment for as little as $99 with a built in printer, to high quality credit card machines that can be purchased for an affordable $149 that are top of the line, fast, small, lightweight machines that contain thermal printers that never need ink.

The bottom-line is that buy your credit card equipment if you can afford the upfront cost, and if you have no choice but to lease, read the fine print before you sign on that dotted line!

For more information, visit Credit Card Processing and Merchant Account Services.