Why are there monthly terminal rental fees?

What are terminal rental fees and why should I pay?

Credit card machines nowadays are like phones with both the hardware and software on them which need updates. They’re also rigorously tested for security and thus need authentication by the banks. Rather than charging large sums outright, payment providers charge a monthly terminal rental fee to merchants for the use of the physical card payment terminals (also known as point-of-sale or POS terminals). These fees help cover the cost of providing and maintaining the equipment that enables merchants to accept card payments.

Key Reasons for the Monthly Terminal Rental Fee:

1. Equipment Provision: The terminal rental fee covers the cost of supplying the card payment terminal to the merchant. These terminals are often expensive and require investment from the provider, so the fee helps recoup this cost over time.
2. Maintenance and Support: Payment terminals require regular maintenance, software updates, and technical support. The monthly rental fee typically includes the cost of keeping the terminal in good working order and providing customer support in case of issues.
3. Upgrades and Security Compliance: Credit card processing technology and security standards are constantly evolving. The rental fee allows the provider to regularly update or replace terminals to meet new security protocols (such as PCI compliance) or add new features like contactless payments or mobile wallet integration.
4. Minimized Upfront Costs for Merchants: By charging a rental fee rather than selling the terminals outright, providers allow merchants to avoid large upfront costs. This makes it more affordable for businesses to start accepting card payments without having to purchase expensive equipment.
5. Flexibility for Merchants: Renting a terminal offers flexibility for businesses. For example, if a business needs to upgrade to a more advanced terminal or if their terminal becomes outdated, the rental model allows for easy switching without having to purchase new hardware.
6. Risk Management: From the provider’s perspective, renting the terminal instead of selling it outright allows them to manage risk. If a merchant goes out of business or switches providers, the terminal can be returned, rather than the merchant being stuck with purchased equipment they no longer need.
7. Sim Cards: Nowadays most card terminals come with sim cards inside which also incur a monthly fee. These are useful in case you take the terminal on the move, for events, or in case your wifi has an outage. These connect to the best available network.

In Summary:

The monthly terminal rental fee covers the cost of providing, maintaining, and upgrading the card payment terminal, while also offering flexibility and minimized upfront costs for merchants. This fee helps ensure that merchants have access to up-to-date, secure payment technology without having to bear the full cost of purchasing and managing the equipment themselves.

For advice and complete transparency on how fees work, contact John@lowerfees.ie or call/text 085 1303259.