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The Green Sheet Online Edition

June 11, 2012 • Issue 12:06:01


Sell, lease or place equipment?

Is there a consensus among payment pros about whether it's best for merchants to own their POS terminals or systems, lease them or accept them "free" with strings attached?

Ralph Cordoway
Cordoway Enterprises


Equipment leasing was once the lifeblood of merchant level salespeople (MLSs), who relied on the monthly income from leasing contracts while building their residual streams. With the advent of free terminals several years ago, the landscape changed, and equipment leasing became far less prevalent. Now, entire POS systems are offered for free, with accompanying service contracts.

Leasing hasn't gone away, and neither have equipment and system sales. It appears there is no consensus on which option is best. The feet on the street are selling, leasing and placing free POS equipment and systems, depending on merchants' individual business needs, as well as on what offerings their ISO partners provide.

When he authored our Street SmartsSM column, Eureka Payments LLC President Ken Musante addressed the issue of leasing in a two-part series, "Will leasing make a comeback?, Parts 1 and 2, published Jan. 10 and Jan. 25, 2011, in issues 11:01:01 and 11:01:02, respectively. The articles contain quotes from members of GS Online's MLS Forum that represent a range of viewpoints on the topic of leasing. A few opinions of note (remember, these are just opinions):

  • Banks offering accounts to merchants push equipment leasing more than ISOs.

  • ISOs with employees, not independent agents, emphasize leasing so they can be assured of steady income to cover salaries.

  • A business owner can write off the full value of a lease as an expense, but if the owner buys a terminal, he or she must depreciate the value of the terminal.

There is also a May 2012 thread titled "Pros & cons of subscribing vs. owning POS systems" in the MLS Forum. Forum members voiced differing opinions about whether it makes sense to accept free equipment and pay a fixed monthly fee for service and support, or whether it's best to purchase equipment and pay for service and support as needed.

For example, JEH1003 said businesses make purchase versus lease decisions every day on everything from "kitchen equipment to computers. ... I think it depends completely on the individual client. In my opinion, a restaurant running $30k a month or more should generally purchase a system outright if their cash flow allows it. I'm not a fan of leasing or renting anything if it can be avoided."

NWBC endorsed participation in free POS placement programs, stating, "I've got the numbers, and over the long term of operating and maintaining a system, the overall cost is less to a merchant through a placement program and not an ownership program. ... What's really being argued here is whether or not an agent should have a business outlook that is short-term or long-term."

Another issue brought up was the difficulty of assessing the relative value of selling, leasing or placing POS systems of varying quality that offer different combinations of features. It's probably best to follow forum member BER's advice: no matter what the situation is, research your options.

Thank you for your question, and best of luck to you.


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end of article

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