| When
big companies buy equipment, they often solicit
proposals from multiple equipment manufacturers
to drive the best deal. Many small and mid-sized
merchants don’t have the time or resources
to shop around for a payment device, so they turn
to their merchant acquirer for guidance.
However, they often don’t
get the deal they’re bargaining for –
and they usually don’t know it.
Most merchant acquirers sell the
concept of multi-year equipment leasing. Contracts
span three to five years – sometimes longer.
It’s during the sales pitch that the deception
comes in:
“My company [almost always
a middleman] can save you $100 per month on your
processing fees … and this new machine will
cost you only $49 per month. You save $51 per
month for as long as you use it.”
Yet, most new payment terminals
cost only $250 to $500 and can easily be purchased
at large big-box retailers, on e-Bay or the internet.
With a five-year lease at $49 per month, that
terminal ends up costing $3,000.
Thousands of dollars go to the
independent contractor who sold the equipment
as well as the sub-ISO and ISO middlemen who represent
the merchant acquirer and sold the lease. Add
taxes and insurance to that – plus a 10%
fee (another $300) to gain ownership of the equipment
at the end of the lease … and the result
is a merchant who has paid way too much for a
non-cancellable lease.
To make matters worse, the $100
monthly savings on processing fees usually never
appears, and if it does, the savings is wiped
out with the next markup of rate changes by one
of the other middlemen.
Knowing this simple fact can save a lot of money.
Small and mid-sized merchants have the
right to reasonable equipment costs.
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