The Non-Cancellable Terminal Lease: How It Really Works

Why a lease outlives your merchant account

Visa's rules define the merchant discount rate as excluding fees invoiced separately, and give the rental of point-of-sale terminal equipment as an example. In practice the lease is often a different contract with a different company. Cancelling the processing account ends the processing agreement on its terms; it does not by itself end a lease you signed with someone else. Read both documents and note which company each one is with.

What UCC Article 2A says

Article 2A of the Uniform Commercial Code, which states adopt with their own variations, defines a finance lease in section 2A-103(1)(g) as a lease where the lessor does not select, manufacture or supply the goods, acquires the goods in connection with the lease, and meets one of several disclosure conditions about the supply contract. Section 2A-407 says that in a finance lease that is not a consumer lease, the lessee's promises become irrevocable and independent upon acceptance of the goods. Such a promise is enforceable between the parties and by or against third parties including assignees, and is not subject to cancellation, termination or modification without the consent of the party to whom the promise runs. That is why a lessee may owe payments even when unhappy with the equipment. Whether a given contract is a finance lease, and which state's version applies, depends on the documents.

What regulators have alleged

The FTC's consumer advice (June 21, 2018) warned businesses that they can end up paying thousands to lease equipment that would have cost a few hundred dollars to buy, that leases may not be cancellable despite promises, that agreements can hold the business owner or signer responsible, and that they can require disputes to be heard in another state. In a July 2013 complaint the FTC alleged that Merchant Services Direct agents persuaded merchants to lease terminals for two to four years by falsely saying existing terminals were outdated, sometimes called the terminals free, and presented binding contracts as applications. In a 2008 settlement, the FTC said defendants had falsely represented they would buy out merchants' existing equipment leases. In 2020 the New York Attorney General announced a court decision against Northern Leasing Systems that would void what it called potentially hundreds of thousands of fraudulently induced card equipment leases and vacate about 30,000 default judgments. These are allegations, findings and settlements about specific companies, not evidence about any other provider.

Work out the real cost

Illustrative example only, with made-up round numbers: a lease of $60 a month for 48 months totals $2,880 before taxes, insurance or fees. If the same terminal costs $400 to buy, the lease costs $2,480 more over its term. Add any end-of-term buyout, and check whether the lease renews automatically, charges a loss or damage waiver, or requires return shipping.

Before you sign, and if you already have

Before signing, ask for the purchase price in writing, the name of the leasing company, the total of payments, the term, the renewal and notice terms, the buyout amount, and where disputes are heard. Do not sign anything described as an application without reading every page. If you already have a lease, find the end date and notice requirement, send any notice in the form the contract requires, keep copies, and ask the lessor for a written buyout quote. If you believe the lease was misrepresented, you can report it to the FTC or your state attorney general and speak to a lawyer. This is general information, not legal advice (September 17, 2026).