Merchant Terminal Regulation

Update On Vermont’s New Law Addressing Credit Card Machine Leasing

When it comes to acquiring credit card processing equipment, small businesses can feel overwhelmed by choice and conflicting information. When business owners lease credit card machines, some end up feeling like they overpaid or didn’t get the level of service they were promised. That’s why Vermont’s new law to regulate credit card machine leasing is a win for small businesses across the state. Here’s what you need to know about the law and the three main choices businesses have for obtaining credit card processing equipment.

About The Law

Vermont Attorney General receives more complaints about merchant equipment than anything else

In a special session of Vermont’s General Assembly, the House and Senate passed a bill (S.206) to add a subchapter to existing statutes on Commerce and Trade and Consumer Protection. The new regulations became law on July 1, 2018. According to Vermont’s Attorney General TJ Donovan, “The most common complaints received…from business consumers are for credit card equipment leases.” The new law is intended to help small businesses by making equipment leases more transparent, easier to understand, and by giving businesses the right to purchase the credit card terminal they are leasing, as well as the right to cancel the lease within the first 45 days.

Credit Card Terminals: Lease, Rent, Or Buy?

Rent, Lease, or Buy a Merchant Terminal?

Small business owners face many decisions as they prepare to open a store, restaurant, or other type of storefront enterprise. While some businesses avoid credit card terminals altogether with a “cash only” policy, this comes with several downsides including potentially lower sales. If you want to give your customers the payment convenience they’ve come to expect, and take advantage of consumers’ propensity for spending more with plastic than cash, you have three options for obtaining a credit card terminal: lease, rent, or buy. Vermont’s new law addresses the leasing option, but we will cover the other two as points of comparison.

Leasing a Credit Card Terminal: How Does It Work?

The main selling point of leasing a credit card terminal is usually “no up-front costs.” For small businesses grappling with many planned (and unplanned expenses) at the beginning, the idea of setting up payment processing without writing another check is very attractive. However, this initial convenience can give way to headaches, as credit card terminal leases usually last for about four years, over which time you’ll end up paying much more than the retail value of the equipment. On the positive side, leasing a credit card terminal is similar to leasing a car, in that the company who leases the equipment to you will take care of maintaining and replacing the equipment when necessary. Overall, if you decide to go with the leasing option for obtaining a credit card terminal, read AG Donovan’s press release about the new law, and make sure you read the contract carefully before you sign it.

Renting a Credit Card Terminal: How Does It Work?

The rental option has become increasingly popular among businesses who don’t want to purchase and maintain credit card machines themselves. Unlike a multi-year lease, renting a credit card terminal is usually a month to month arrangement, so it’s easier to cancel if you’re unhappy with the service you receive. In fact, Union Bank is so committed to doing what we think is best for our community small businesses that we only offer rent and buy options for payment processing terminals.

Buying a Credit Card Terminal: How Does It Work?

If you have the cash upfront, buying your own credit card machine will free you from the monthly payments that come with renting or leasing. Terminal prices have come down in recent years, so you may be able to afford your own. However, just as with owning a car, you’ll be responsible for maintaining and replacing the machine, and you may not have a customer service line to call when things go wrong.

Your Local Merchant Services Provider

If you’re looking to rent or buy credit card processing equipment, partner with a local financial institution like Union Bank. We offer small business payment processing and other merchant services. You’ll love our competitive rates, knowledgeable customer service team, convenient next-day deposits, and more. Call us today at 1.800.753.4343 to learn more or get started.

Talk with our local merchant services team