A terminal lease is a finance contract, not part of your processing
The FTC has warned that businesses can pay thousands to lease equipment that would cost a few hundred dollars to buy [1]. When a processor offers a terminal on a lease, the lease is usually with a separate leasing company. In one FTC case, the terminals were "subject to four-year leases between the merchants and third-party leasing companies," and merchants signed "a 48-month Non-Cancellable Lease for equipment" along with the processing agreement [2].
That separation matters. Closing your processing account does not end the lease. Switching processors does not end it either. You can stop taking cards on the device and still owe every remaining payment.
Non-cancelable
You cannot end the contract early by returning the device. Read the default and termination sections to see what you would owe if you stopped paying.
What the FTC and state attorneys general have found
Terminal leases have drawn repeated government action. These are the cases and warnings we could confirm on official sites:
| Year | Who | What they said or did |
|---|---|---|
| 2007 | FTC, in federal court in Oregon | Alleged agents claimed merchants' terminals were outdated and that the company would pay off old leases, then signed them to 48-month non-cancelable leases [2] |
| 2014 | FTC with Washington's attorney general | Merchant Services Direct allegedly told merchants they could cancel at any time while putting them in two- to four-year terminal leases; defendants agreed to pay $175,000 [3] |
| 2018 | FTC business guidance | Warned that businesses "can end up paying thousands to lease equipment that would have cost only a few hundred dollars to buy" [1] |
| 2020 | New York attorney general | Won a court ruling against Northern Leasing Systems that voided what the office called fraudulently induced card equipment leases and vacated about 30,000 default judgments [4] |
New York said Northern Leasing targeted small, family-owned businesses, including "automotive repair shops, bodegas, delis, restaurants, and bars" [4]. The court also barred the company from the equipment leasing business [4].
How to add up the total cost of a lease
The monthly number is designed to look small. The total is what you are agreeing to. Do this math before you sign, using the lease page itself, not the sales sheet.
- Find the monthly payment and the number of months. Multiply them.
- Add any upfront fee, insurance or "loss damage waiver" charged each month, and sales tax if the lease adds it.
- Check the end of the lease: do you own the device, return it, or keep paying month to month until you send notice?
- Find the early termination terms. Non-cancelable usually means every remaining payment is due.
- Price the same device bought outright. A Square Terminal lists at $299 and a Square contactless and chip reader at $59 [6].
Our terminal lease calculator does steps 1 and 2 and sets the total next to the purchase price.
Not every monthly payment is a bad deal
Some processors sell their own hardware on a monthly plan. That is different from a third-party lease, and the numbers are usually printed on the pricing page. Square offers its Terminal at $27 a month over 12 months, $25 more than buying it [6]. Clover lists its retail Basic system at $16 a month for 36 months or $349 outright [7].
Those plans are easy to price because the cash price sits next to the monthly one. A plan where nobody will tell you the cash price, or where the device is "free" but a separate lease shows up later, is the one to slow down on. The Minnesota attorney general advises checking with your current processor to see whether you need new equipment at all, and shopping around before signing [5].
Lease, monthly plan or buy: how the three compare
| Third-party lease | Processor's monthly plan | Buy outright | |
|---|---|---|---|
| Who you pay | A leasing company, often separate from the processor [2] | The processor or POS company [6][7] | The seller, once |
| Cash price shown | Often not | Yes, next to the monthly price [6][7] | Yes |
| Typical term | Two to four years in the FTC cases [2][3] | 12 to 36 months on published plans [6][7] | None |
| Ends if you switch processors | No [2] | Read the plan terms | Nothing to end |
| Total cost | Can reach thousands for a device worth a few hundred dollars [1] | Close to the cash price on Square's Terminal plan [6] | The device price |
If cash is the reason you are looking at a lease, compare the lease total with a short monthly plan from the processor or with a small equipment purchase on a business credit card. Both are usually far easier to exit.
Red flags before you sign
- The rep says your current terminal is outdated or will stop working, and has not shown you why. The FTC's 2007 case turned on that exact claim [2].
- You are told you can cancel any time, but nothing in writing says so [3].
- The lease is signed on a screen and you are not given a full copy [2].
- The leasing company is a different name from the processor, or is located in another state, and disputes must be heard there [1].
- You are asked to sign personally, not just for the business. FTC guidance warns that leases can hold the signer responsible for the debt [1].
The FTC's advice is short: do not be rushed, research the company, and get every term in writing with a copy of the whole document [1].
Already in a lease? What you can do now
- Find the full contract. Ask the leasing company for a copy if you never got one.
- Write down the remaining payments, the end date and what happens at the end. Check whether the lease renews on its own unless you send notice by a set date.
- Ask for a buyout figure in writing and compare it with the total of the remaining payments.
- If you were misled about cancellation or costs, file a complaint with your state attorney general and the FTC. Keep copies of every message from the rep.
- Keep the device until the lease ends or is settled. Returning it early usually does not stop the payments.
BatchOut is our own processing service. If we show it to you, it is labeled as ours and sits next to other options. This page is general information, not legal advice, as of Oct 20, 2026.