Free Terminal Offers: What to Check Before You Sign

Ask which documents you are signing

Before the price conversation, ask for the name of every document in the pack and who the counterparty is on each. A processing agreement is with your processor or acquirer. A hardware document may be a placement (the provider lends you the device and you return it), a rental you can cancel, or a finance lease with a third-party leasing company that continues after your merchant account closes. The FTC's 2018 consumer alert tells businesses to “Get it in writing. You'll want to see all the terms in writing before you sign,” and adds that if you do not get them, walk away, and that if you do sign you should get a copy of the entire document, especially if you sign electronically.

What the FTC has alleged about these pitches

In its 2013 case against Merchant Services Direct, LLC, the FTC alleged that agents “dupe customers into leasing new card processing terminals for two to four years, falsely claiming their current ‘swipe’ terminals are outdated or incompatible with its services,” and that “sometimes they even claim the terminals are free.” The complaint also alleged that agents “specify a much lower rate than the businesses currently pay, and quote one fee, a fixed per-transaction cost, without mentioning all the other fees the businesses will have to pay,” and that they “persuade merchants to sign fine-print, binding contracts on the spot by telling them the documents are merely applications – a ruse made easier, according to the FTC, by the fact that the contracts are labeled ‘applications.’” Customers promised they could cancel without penalty were, the FTC alleged, charged substantial cancellation fees. In its 2022 complaint against First American Payment Systems, the FTC alleged the company charged merchants fees they had not agreed to and made cancelling difficult. These are allegations from enforcement actions, not a description of any particular offer in front of you — but they are the specific claims regulators have found worth suing over, so they are the specific claims worth testing.

Price the account without the hardware

The cleanest test of a free terminal offer is to ask for the same pricing quoted with the hardware removed and bought outright instead. You then have two comparable numbers rather than one bundle. Ask for the markup above interchange in basis points and cents, every fixed monthly fee by name, the term length, and what is owed if you leave early. The FTC's alert warns that lease agreements can hold business owners “responsible for the debts” and “require that legal disputes are heard in another state,” so the governing-law and venue clauses are part of the price. Illustrative example only, with made-up round numbers: a device offered free against a 48-month commitment at $60 a month is a $2,880 commitment, and whether that is reasonable depends entirely on what a purchased device and a month-to-month account would have cost you — which is exactly the quote to ask for.

The questions that settle it

Four questions, asked in writing and answered in writing. What is the term, in months, on each document? What is owed if I close the account in month three, and under which clause? Do I return the hardware, and to whom? Is there a separate leasing company, and if so, does its agreement end when my merchant account ends? A provider placing hardware as a cost of winning your account can answer all four in a sentence each. If the answers arrive only verbally, treat that as the answer.

If you have already signed

Get copies of everything you signed, including anything signed electronically, and read the hardware document first — it is the one most likely to outlive the processing account. Identify the counterparty, the term, the buyout and the return address. If the account itself is the problem rather than the device, our guides on cancelling a merchant account and on early termination clauses cover the sequence. This is general information, not legal advice (September 17, 2026).