In my opinion, there is no bigger rip-off in merchant account services than the credit card terminal lease.
Why is that?
Well, for starters, you can’t cancel them. At least, not until 48 months have passed since signing on the dotted line.
And then when you’re finally able to cancel, provided you remember to call up the company to stop your monthly payments, nine times out of ten they’ll ask for the credit card terminal back.
Which means… you’re right back at square one, needing a credit card terminal. Again. And wasn’t that the problem when you signed up for the lease in the first place?
So what can you do?
Three reasons why owners sign a lease
To understand why do many business owners choose to sign up for a lease, rather than buying the equipment, there are three key points.
First, the majority are opening their first business, or are accepting credit cards for the first time. Their concern, understandably, is to get up and running as quickly as possible. The focus is on the grand opening.
Or if they’re already in business, getting set up like yesterday because, more likely than not, they’re responding to customers asking (begging?) them to accept credit cards.
So time is usually a critical factor.
And this means NOT looking at or asking about the finer points of these contracts.
The next reason why business owners fall for the “lease trap” is the failure to realize that accepting credit cards is much more complicated than they initially thought.
In fact, I hear this one all the time.
Let’s be honest with ourselves for a moment here – how many of us read the fine print of service agreements or contracts? Very few people, in my experience, will pour over tiny fine print covering 4, 5 or 6 pages of legal-speak.
And most sales reps know this.
Their goal is to get you to sign on the dotted line. It’s is NOT to educate you, to explain all the finer points of the agreement or contract (heck, many of them don’t even know all the details). So no one mentions that the lease is non-cancelable.
Or that, in the long run, it will cost you WAY more than the credit card terminal is worth.
And that bring us to the third reason, which we’ll discuss below. This point involves the “psychology of pricing.” What sounds like or seems like a better deal to you, $700 out of your pocket right now, or $39 a month?
If you’re like most people, the second price point SEEMS like a better deal. Hey, it even looks better on paper. Which is why we’ll discuss…
The true cost of credit card terminals
Lease programs are sold by hiding the true cost to the business owner. Though they are disguised as a payment plan (the QVC effect), they are NOT a payment plan.
So how does this work?
The first step is to over inflate the price of a credit card terminal. Often the cost is disclosed as $500, $600 or more. And so, the pitch is…
“why pay $500 out of pocket, when you can lease a terminal for $35 a month?”
The key is to focus your attention on the “low” monthly fees. Along with the “no out of pocket expenses” line.
But in reality, most credit card terminals will wholesale for around $200. And if you still don’t want to put up any money for “your own” terminal, lots of providers have free equipment programs.
- So do a little research.
- Ask for references.
- Know which questions to ask.
- It will save you in the long run.
Bottom line, not all companies are the same. And there’s more to accepting credit cards at your business than most people know.
Or want to know.
I hope you found this information helpful. Please feel free to share your comments below.
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