The equipment lease, and why it is the most expensive line you have.
A terminal that costs a few hundred dollars to buy can cost several thousand across a lease term, and the lease frequently cannot be cancelled even when the processing agreement can. It is the single most common way a switch ends up costing more than it saves.
What this page settles.
Three questions, in the order most people ask them.
A lease is not a processing agreement
When you signed up, you may have signed two or three documents in one sitting. One was the merchant processing agreement. Another, quite possibly, was an equipment lease — and it is a different kind of thing entirely.
The processing agreement is a service contract with your processor. It has a term, usually a notice period, sometimes an early termination fee, and it ends when you end it properly.
The lease is a finance agreement, frequently with a third-party leasing company that you have never spoken to and whose name may not appear on anything you look at monthly. It is written to be non-cancellable for its full term. That is not a quirk; it is the entire commercial basis of the product. The leasing company paid for the hardware up front and is being repaid with interest over three to five years.
The practical consequence, and the reason this page exists: cancelling your processing agreement does not cancel the lease. The direct debit keeps going. We have seen merchants two years into paying for a terminal sitting in a cupboard, for a processor they left in 2024.
What makes it expensive
Run the arithmetic on your own figures, because it is usually worse than people expect.
A countertop terminal that retails for a few hundred dollars, leased at a monthly payment over 48 months, routinely totals several times the purchase price. The lease is not hiding this — the monthly figure and the term are both on the document — but nobody multiplies them at the point of signing, because the monthly number is small and the person across the table is talking about something else.
Three features compound it:
The term is long. Forty-eight and sixty months are both common. At the end, you frequently do not own the equipment.
It is often non-cancellable. Selling the business, closing the business, or the terminal becoming obsolete typically does not end the obligation.
There is usually a personal guarantee. Which means it is not only the business on the hook. Worth reading that clause specifically.
The single most expensive mistake in this whole category is not a bad rate. It is a four-year non-cancellable lease on a terminal that could have been bought outright for less than a year of payments.
Lease, rental and purchase
Three words that get used interchangeably by salespeople and mean very different things on paper.
Purchase. You buy the terminal. You own it. If you switch processors, it comes with you, assuming it can be reprogrammed — which is worth confirming before you buy. Highest up-front cost, lowest total cost, and no exit problem.
Rental. Usually month-to-month or short term, cancellable with notice, equipment returned at the end. More expensive per month than buying over time, but it carries no long tail. For a seasonal business or one testing a new location, often sensible.
Lease. Long term, non-cancellable, personally guaranteed, and frequently with a buyout at the end to actually own the hardware. Lowest monthly figure, highest total, and the one with the exit problem.
The word used in conversation is not reliable. Read the document and look for the term length and the cancellation clause — those two tell you which of the three you are actually in.
Finding out what you actually signed
If you are not sure, here is where to look, in order.
Your bank statement, not your processing statement. This is the important one. A third-party lease is frequently debited directly from your bank account and never appears on the processing statement at all. Scan a full month of outgoings for a company name you do not immediately recognise.
The original paperwork. Look for the words non-cancellable, finance lease, or a separate signature block with a different company’s name at the top.
The term and the start date. Together they give you the end date, which is the single most useful fact on the document.
The personal guarantee clause. Usually near the signature.
If you cannot find the paperwork, the leasing company will send it to you on request. So will your processor, generally.
Getting out, and what that costs
Be realistic: for most non-cancellable leases, the honest options are to buy it out or to run out the term.
Ask for the buyout figure in writing. It is usually the remaining payments, sometimes discounted, sometimes plus a purchase option. Get the number before you make any decision about switching, because it changes the arithmetic completely.
Do the sums properly. Monthly saving from switching, multiplied by the months remaining, against the buyout figure. If the saving covers it, switching still makes sense and you should just pay it. If it does not, the right answer may be to switch when the lease ends and diarise the date.
Check for an automatic renewal clause. Some leases roll over if you do not give notice at the end of the term. Finding that out in month 47 is considerably better than in month 50.
Do not simply cancel the direct debit. That is a default on a finance agreement, usually personally guaranteed, and it will follow you.
If you believe you were misled about what you were signing, that is a consumer-protection and contract question rather than a payments one, and it is worth an hour with a lawyer rather than advice from us. We will tell you what the document says; we are not the right people to tell you whether it is enforceable.
Before you sign the next one
Four questions, before any signature, and they take two minutes.
- Is this a lease, a rental or a purchase? Ask for the word that appears on the document, not the word in conversation.
- What is the total of all payments over the term? Monthly figure times months. Hold that against what the hardware costs to buy outright, which you can look up.
- Can it be cancelled, and on what notice?
- Do I own the equipment at the end, or is there a buyout?
And the simplest protection of all: for a single countertop or handheld terminal, buy it. The cash outlay is typically less than a year of lease payments, you own it, and you have removed the one thing most likely to make your next switch cost more than it saves.
What we charge
Interchange + 0.50% + 10¢ in person, interchange + 0.75% + 25¢ keyed. No contract and no early termination fee, so there is nothing on our side to buy your way out of later.
On hardware we will tell you the purchase price, and if a lease is genuinely the right structure for a large multi-station install we will say so and show you the total across the term before you sign anything. Send us your current agreement and we will tell you what you are actually in.
While we are on the subject
Can I cancel an equipment lease?
Usually not before the end of the term. Most are written as non-cancellable finance agreements, which is exactly what makes them different from the processing contract. What you can normally do is buy it out, and that figure is worth asking for in writing.
Does cancelling my processor cancel the lease?
No, and this is the single most common unpleasant surprise in switching. They are separate agreements, often with separate companies. The lease keeps billing.
Can I just stop paying?
That is a default on a finance agreement, with the consequences that implies for your business credit, and most leases carry a personal guarantee. Get the buyout figure instead.
Is leasing ever the right choice?
Occasionally, for expensive multi-station systems where the cash outlay genuinely matters. For a single countertop terminal it is almost never the cheaper option over the term.