Don’t Lease a Credit Card Machine!

Only lease a credit card machine if you want to pay $3,000 for a machine that you could have purchased for $250.

Credit card machine leases are nonsense!

Thankfully, the practice of leasing credit card machines has been declining quickly over recent years, but some processors just can't seem to let the cash cow go. Leasing processing equipment is a big money maker, and processors with questionable business practices will ride the gravy train to the end of the tracks.

A recent experience we had here at CardFellow will give you an idea of just how much money a processor can make by leasing a credit card machine.

We recently helped a dental office that was paying $45 a month over four years for a PIN pad that they could have purchased for $90. They're paying $2,160 for piece of equipment worth $90. The processor is making a profit of $2,070!

We would have loved to post the name of the processor, but the dental office asked us not to. Please post a comment below to let us know if you're stuck in a lease. We're more than happy to give processors willing to lease equipment some negative press.

Benefits of a Lease (According to Processors that lease equipment)

The term beneficial lease is an oxymoron when referring to processing equipment. Regardless, let's look at the benefits of leasing as provided by processors that lease equipment.

  • No initial costs
    Well, this is certainly true. A lease does not typically require an initial investment. Instead, it drains your bank account over a period of two to four years. Borrow $200 for a friend or relative if this is your main motivation for leasing a machine.
  • Fixed monthly payments
    They're right again. Leases do typically have fixed monthly payments. Of course, a single fixed payment of $200-$300 is a lot more attractive than 48 payments of $50.
  • Future-proof
    This selling point is always a headliner when it comes to leasing. After all, technology is moving so quickly that you're terminal will be obsolete in a year or two. Right? Wrong. Modern terminals will be valid for quite some time. Even if you have to purchase a new terminal every five years, you're still paying much less than you would have if you went the leasing route.
  • Lease costs are tax deductible
    Of course they are, but so is the cost to purchase a terminal. This one is laughable.

It's not the agent, it's the processor

This is a lame excuse. The organization selling bankcard services, whether a direct processor or an ISO, has the ultimate say in what is and isn't an acceptable practice. Some two bit agent using their processor as an excuse to lease equipment is one you should throw out of your store.

Agents and ISOs earn (a lot) of commission by leasing equipment, and any willing to do so is simply looking to pad their profits.

Look at First Data Global Leasing, for example. First Data has thousands of ISO and agents, and their leasing program is available to any that want to use it. However, many prefer not be associate with gouging their customers on equipment costs. Imagine that?

Getting out of a credit card machine lease

Unfortunately, lease agreements are water tight. You'll have better luck getting out of a straightjacket than a lease agreement.

The best thing to do if you're stuck in a lease is to read your agreement carefully to determine how much notice you have to give to cancel your agreement. Once you figure out the date, set a reminder so you don't miss it.

And forget about buying your equipment at the end of the lease. Most leases have a fair market value clause that would make you pay more than the terminal is worth. Not to mention that processors usually sell equipment at or near cost with a new credit card processing account.

There is some good news, though, if you're looking to break your lease because you want to switch processors. A lease agreement is typically separate from a processing agreement. This means that you can cancel your merchant account agreement without having to cancel your lease agreement.

Many credit card machines such as those made by Verifone, Hypercom and Nurit are universal and can be reprogrammed to work with different processors. If you have a universal machine, you can ditch your current processor, continue paying on your lease, and use the machine with your new processor.

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19 Responses to Don’t Lease a Credit Card Machine!

  1. Sam says:

    I feel completely scammed by this elit global co and northern leasing co both of them in bussness to steal money from small bussness ppl ,

    • Jen says:

      I too have just been a victim of a scam from Elite Pay global and Northern Leasing!! Everything was signed electronically and there was no way to read the full terms of the contract not were they explained. I am furious and don’t know what to do but I cant let them take my money.

  2. Denise T says:

    i was in business for 13 yrs and used PACIFIC LEASE FINANCING, they are the biggest
    ripoffs ever… they told me after 4 years of paying the lease, i would OWN the terminal.
    that was a lie so for the past 13 yrs i have been paying them. When i finally went out
    of business and closed my shop, they keep harrassing me and threatening me, different
    people keep calling and telling me i owe all this money. I am seriously considering getting
    an attorney to file a class action suit, I even sent the equipment back to them. not to mention that it was the same original 13 yrs old equipment and they never once updated it.

  3. Rene Ranieri says:

    I just found myself locked in to the same problem as many others…being approached by a company (lease finance group..LFG) who convinced me to switch processors because of better rates. I found myself in a new lease, for more money thanks to some blatant ‘untruths’ of the sales girl. I tried to cancel, and the company conveniently didn’t get the lease papers to me for over 3 weeks. They left no copies on the day I signed, and ‘written notice to cancel’ had to be sent in within 3 days of the sign date.

    Beware of these companies…I’m surprised some lawyer hasn’t started a class action suit because of deceptive practices! I’m sure there are plenty of us who would sign on!

  4. Pingback: Merrimack Credit Card Machine Leasing | Understand Finances

  5. Shauna says:

    I just discovered that Lease Finance Group has been deducting $58./mo. from my checking acct. since 2001! They were kind enough to FAX me the copy of the lease which had a 48 mo. term. If I understand the fine print, there are 3 options at the end of the term…1) return the equipment 2) buy the equipment at fair market value or 3) continue monthly payments. Of course if no action is taken at the end of the term, they default to option 3. So I played right into their hands as I was set up to do. So now I have paid them somewhere around $9,600. for some long gone obsolete boat anchor. And to rub a little salt on the wound, they want another $254. “buy out”??? I recently terminated my contract with Northern Leasing 3 mo. early and was happy to pay the $120. penalty and return the machine because I now have TransFirst which charges a $39./mo. flat fee, no equipment necessary! Oddly enough, the rep I spoke to about the lease fees debits had all the info from both previous accts. altho they were competing companies?? Sooo….don’t sweat a 48 mo. lease!! Just make sure you TERMINATE at the end!!! Wow, do I ever feel stupid!!!

  6. Myda says:

    I was approached by Elite Pay Global. I was already with First Data but EPG’s rates were better. I told them I already had a machine and they said I couldn’t use it with their contract and in order to get the great rate I would have to lease a machine for 48 months at $187.47/month. What a fool I was! I wish there was a way to get out of this. I have 2 machines that are exactly the same! Not only that, the salesman lied about some things and I had to fight with the main office for them to give me what he promised. What a joke!

  7. John says:

    Like has been stated above, we are closing our business and cannot get out of our lease with Northern Leasing.
    They won’t talk with us. They suggest we sell our lease to another company. Who would want it?

  8. Jacob says:

    I have a lease with Elitepay global . Not even a month into having signed a lease , i can’t get out of this mess. I called this salesman back within a hour of signing it, and asked for her to come back to cancel. They didn’t even leave me with the a contract. Over the phone the salesman said it would be emailed to me. I was busy that day and signed,because all the saving I would get out of it. I sign it and she just about ran out. They refused to come back to get out of the signed lease. I just see no way out.

  9. Jim says:

    I just inquired about breaking my lease and found out that we are bound to pay the leasing company every month until jJuly 2016. This is insane! I wish there was something I could do to stick it to them.

  10. Gee Lee says:

    I closed my cafe almost 2 years ago, and I’ve been paying $50 a month for a credit card machine I haven’t used since closing. I just found out that I have to keep paying February 2015! The leasing company said I can settle and ruin my credit, or I can find someone to take over my lease. Why would I want to ruin someone else’s life too? I told the lady, “thank you for absolutely no help at all,” and hung up. What a bunch of pirates.

  11. Jordan says:

    I feel completely scammed by Bank of America Merchant Services that leased me a credit card machine through First Data. I’m a very small (one man) start-up tech company. They convinced me of the need for the machine. The Small Business Merchant sales representative told me not to worry if I needed to cancel because if my business did not work she would take care of cancelling the lease. Well no luck they are sticking to the lease for a wireless machine at $45 a month for 48 months. I’ve closed the company, and Bank of America closed merchant account, but I’m still stuck paying the lease. I’m trying to fight it.

    • Ken Lindstrom says:

      The same thing happen to me. I never signed the lease agreement. The salesman told me that the equipment was a rental and that I could cancel at any time. I called First Data, and I was told that I had to pay $70.00 plus tax for the next 48 months.
      Did you have any luck with fraud charges, or are you just as stuck as I am?

    • Laura says:

      Hi Jordan,
      I’m currently in the same exact situation with a merchant services account through Wells Fargo. I sent back my equipment within a week or so of discovering the 48 month lease that NONE of the employees told me about when I signed up. I will not be using it and have been making phone call after phone call to get my lease dropped. have you had any luck fighting the lease since last year?
      Thanks! Any advice will help.

  12. Jean says:

    I am so mad that our credit card machine (we owned it) broke in December, and due to the craziness of the season with business and family, I trusted my PNC bank rep who told me my only options were to lease a machine for $33 per month, or buy the new machine for close to $1000. Well, we needed our credit card income and we did not have the extra $1000, so I opted for the lease not knowing the total rip-off that it is. Granted, we had to upgrade the machine to accept another form of payment, but if I knew that the price of these machines was actually more like $200, I would have bought the better model that we have now. I just saw it online for $189.00. I am stuck paying $33 per month for 45 more months! That is robbery! There has to be a loop-hole or way to get out of it. Anybody know?

  13. Aleatha Carpenter says:

    I am having a complete nightmare with a credit card terminal leasing company!!! I have no experience in this and feel trapped by a 48 month lease with Elite Pay Global that I can not figure out how to solve. I have no equipment that works and yet they continue to demand that I pay. The salesman who they contracted out with and was my first contact has disappeared and they claim they don’t know who the salesman was becasue they contract out with so many different agencies. I cannot afford to continue for something that is unusable. I have spent hours and hours being bumped from dept. to dept. with each saying they are not the ones who handle the issues I am calling about. They continue to say that I signed a contract and must pay but have no concern over the fact that I do not have the approriate equipment that is usable. They just keep saying I need to update my account in full before anything else happens. Isn’t that like paying rent on an apartment you cannot yet live in. How can they get away with this and continue to add on late fees? This has been going on for 4 months! Isn’t a contract about two parties agreeing to do something? Is this not a breach of contract on their part? What can I do?

  14. Catherine says:

    A vendor for Merchant Processing Solutions dba Payment Systems talked our store manager into exceeding her authority and leasing machinery. Estimated value of the equipment: $900. Estimated present value of the lease: $7,000.

    Our only hope now is that our small claims court judge will see that she was not acting as an agent for our S-corporation when she signed this crazy contract.

    Also, this processor has a strange practice of settling in tiny batches, withdrawing fees from our checking account in amounts like $0.67, $0.69 and $1.01. It’s all so fishy!

    • Richard Rice says:

      Catherine, the same thing happened to me. A Payment Systems salesman came in at peak customer time even though I asked him to be there earlier. Being in a big hurry, I let him talk me into signing a Global Leasing contract with the promise that he would return a completed signed copy the next day. I didn’t get it back until the next week. It was filled out alright, the contract name had been change to the company name, my signature had been changed, the equipment had been doubled, and the lease price was $149.00 per month plus other fees. The total price for the terminal was going to be almost $8000.00 (I bought one for $250.00 later). After Payment Systems deducted $3000 from my bank account over a 17 month period, I finally stopped the automatic payments. They are now threatening to sue me. I’m going to go after them on forgery charges. Wish me luck.

  15. Harvey says:

    I wanted to post a comment because I recently leased a terminal for my business. Not only is money tight, but the salesman that leased me the terminal lowered my overall cost of processing to 2.3% including the lease. I agree that there are scammers out there leasing terminals to merchants and hitting them hard in fees, but this company down here I feel really looked out for me and my business. I own a car wash and my terminal already malfunctioned and the next day I received a brand new terminal ready to go. I guess its how you look at it hopefully this helps.

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