The short answer
Payments Dive reported on October 5, 2026 that Toast and Square are leading a round of POS hardware discounting, and that POS sellers make up for discounted hardware through software and processing revenue set out in the merchant's contract. Free or discounted hardware can be a fair deal, but only if you know what you are committing to. Before you sign, get four answers in writing: the monthly software fee per device, the processing rate required to keep the hardware free, the term and the cost of leaving early, and who owns the hardware at the end.
What is happening
Payments Dive reported that Toast and Block-owned Square are leading a push of POS hardware price cuts. It quoted an equity research associate at Baird: if you get someone on the platform through discounted hardware, you have got them ingrained in your software. The same report said POS sellers can make discounted hardware pay through the software and processing revenue specified in the merchant's contract, and in some cases through dual pricing programs.
Why free hardware is not free
A terminal, a kitchen display or a handheld costs the provider money to make and ship. If you are not paying for it up front, you are paying for it another way: a higher software fee, a required processing rate, a longer term, or a fee if you leave early. None of this is hidden if you read the contract, but sales conversations tend to lead with the hardware and leave the rest for the paperwork.
Four questions to answer in writing
What is the monthly software fee, per device and per location, and what features cost extra? What processing rate or pricing plan is required to keep the hardware free, and can it change during the term? How long is the term, does it renew automatically, and what does leaving early cost, including any hardware buy-out? Do you own the hardware at the end, and can it be used with another provider? If a sales rep cannot answer one of these, ask for it in the contract before you sign.
Compare total cost, not the hardware price
Add up what you would pay over the full term: software for every device, processing at your real card volume, any add-ons, and the cost of leaving. Then do the same for an offer where you buy or lease the hardware and choose processing separately. Sometimes the free hardware offer still wins. Often the difference is smaller or reversed once processing is included. Our free statement review can show what you pay for processing today, which is the number most comparisons leave out.
Small businesses and new locations
For a single cafe, salon or shop opening its first location, free hardware can make the opening budget work. That is a real benefit. Just treat the processing rate and term as part of the price, and make sure you can leave if the system does not suit you. Read the early termination clause before you plug anything in.
What changes for multi-location and enterprise operators
Hardware discounts scale with the number of devices, and so do per-device software fees and lock-in. For a group with many sites, ask whether pricing is per device, per location or per account, whether new locations join on the same terms, and whether all locations share one term end date. Check data portability: can you export menus, items, customer and sales history if you switch? And ask how processing is priced across the group, because a required rate applied to every location is usually the largest cost in the deal.
Key takeaways
- Payments Dive reports POS providers are discounting hardware heavily
- Discounted hardware is paid back through software and processing revenue
- Get software fees, required processing rate, term and ownership in writing
- Compare total cost over the full term, including processing
- Multi-location groups should check per-device fees and data export
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