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Should You Get a Free Terminal with a Merchant Account?

Less than five years ago, barely anyone even knew there was an option to get a free terminal from their merchant account service provider. You used to have purchase, rent or even worse – lease a terminal for 3-4 years and pay nearly four times as much. Now free terminals are everywhere! This may cause you to wonder if there is any reason why you shouldn’t get a new free terminal when you switch providers.


We have all heard the phrase, “Nothing is free.” That is most often the case. But some companies really do offer a free terminal placement. In other words, they let you use their terminal for as long as you process with them. But of course your merchant account requires certain fees that cannot be waived if you choose a free placement terminal. Most merchants don’t even know that they can get these fees waived. Most companies require a monthly minimum discount fee of $25.00 and even an annual fee which can range from $50-100. And finally most companies require that the monthly statement and service be set to a minimum of between $5-10 per month. So the equipment is not free after all! In this case it still is. Please keep in mind that it still is a free placement and the fees mentioned earlier are standard with every merchant account unless they are waived. Furthermore, the monthly minimum discount fee is not going to affect you if you process at least $1500 every month.


So here is where decisions must be made. Much depends on your business needs and the size of your business. Another factor to consider is how much it costs to purchase the equipment that you are getting for free. The key is examining your business and examining the free placement program carefully.

For example, if you are selling at trade shows and need a mobile solution for your business on the weekends, then a free wireless terminal would be a real good solution if you can get one. The reason is simple: Wireless terminals cost more money. You could likely process for two years before you paid merchant account fees equaling the cost of a new wireless N8000 or Vx670. After your contract is up you could then switch providers and seek out a new wireless terminal and start all over. What if you purchased a terminal and it stopped working after one year? With free placement, you don’t have to worry. Most companies will swap it out for you although you may incur some shipping charges if you need it rushed.

You can save money by getting a lower-end free placement countertop terminal (N2085, T7Plus) with pin pad. This is especially useful since these terminals come to you programmed and ready to use out of the box. However a word of caution: If you are a smaller merchant trying to save money, you can usually buy these terminals cheap. If you can find a low cost merchant account that waives the fees mentioned earlier, you might well save up $150 in your first year. That more than covers the cost of your new terminal. Just make sure that you check the warranty and to make sure that it is PCI PED compliant. Also I would not advise purchasing POS software or gateways if you can get it for free unless you know for sure that it is the most recent version and is PCI compliant. You don’t know how many merchants are stuck with some old unsupported software that they bought only a few years ago and are now frustrated that they spent so much on it.

So how can you determine if a free placement is right for you? Simply Google the prices on the terminal you are thinking of getting as a free placement. Consider any additional monthly fees and annual fees you will incur for accepting the free terminal. If it is negligible ($10 or less extra per month), I would go for it!

Many companies throw in the free pin pad and check reader which adds additional value. They come programmed and are plug and play right out of the box. To buy all this gear outright would cost you at least $700-800 right from the beginning. You would have to process six years with free placement before you spent an equal amount of money had you purchased outright! Yes, you read it correctly. You could use free placement equipment for six years before you covered the initial cost had you purchased the equipment. How will you feel about your processing equipment after six years? Maybe by then it will be time to upgrade yet again with the latest and greatest terminals that are on the market as free placement.


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