POS vs Payment Processing: Two Bills, Two Contracts

What each one is actually charging you for

The POS is charging for software and, usually, for hardware. That is a subscription: a monthly amount per till or per location, sometimes tiered by feature set, plus the cost of the devices. The merchant account is charging for moving money, and that cost has three published layers and one negotiable one. Interchange is set by the card networks and paid to the bank that issued the customer's card; Visa publishes its US schedule and states in it that merchants do not pay interchange reimbursement fees but pay a merchant discount to their own financial institution. Network assessments go to the network. Your provider's markup is the part that differs between quotes. The reason this separation matters is not accounting tidiness. It is that the two agreements have different lengths, different renewal mechanisms and different exit costs, and a single blended monthly figure hides all six of those facts.

Integrated, semi-integrated, and why the difference shows up on the statement

In an integrated setup the POS sends the amount to the payment device and receives the result back, so the sale, the tender and the card data live in one flow. In a semi-integrated setup the payment device handles the card data separately and returns only a result to the POS, which is the arrangement that keeps card data out of the POS and usually shrinks PCI scope. The choice has a price consequence as well as a security one, because how a transaction is assembled and submitted determines which interchange program it reaches. Visa's US schedule prices the same exempt debit card at 0.80% + $0.15 under CPS/Retail, 1.65% + $0.15 under CPS/Retail Key Entry, and 1.90% + $0.25 at the Standard rate. Nothing about the customer changes between those rows. What changes is how the sale was taken and what data accompanied it, and that is a property of the POS-to-processor integration rather than of your negotiation.

Hardware: sold, rented, or financed by someone else

There are three arrangements and they are routinely described with the same word. Sold means you own the device and it is yours when you leave. Rented usually means a month-to-month charge from the provider that stops when the account stops. Financed means a separate lease agreement, frequently assigned to a third-party funding company, which does not end when your processing agreement ends and is often non-cancellable for its full term. That third category is the one that produces the worst surprises, and it is a matter of public record rather than industry folklore: in July 2022 the Federal Trade Commission filed a complaint against First American Payment Systems in the Eastern District of Texas concerning, among other things, undisclosed exit fees charged to small businesses, and in February 2025 the FTC announced refunds to affected small businesses. Ask which of the three arrangements applies, ask who holds the paper, and get the answer in writing before installation rather than after.

Lock-in, and the question that reveals it

Some POS platforms process payments themselves and will not work with another processor. Some will, but only with named partners. Some are genuinely processor-agnostic. All three are legitimate products; the problem is that the distinction is rarely volunteered at the demo. There is one question that settles it, and it should be asked in writing: if we change processors in year two, does this POS keep working, and what does that change cost? A second question follows it for debit-heavy businesses. Regulation II, at 12 CFR 235.7(a)(1), requires issuers to enable at least two unaffiliated payment card networks on every debit card, and 12 CFR 235.7(b) prohibits an issuer or a network from inhibiting, by contract, requirement, condition, penalty or otherwise, the ability of any person accepting debit cards to direct the routing of a debit transaction over any network that may process it. That right is exercised in terminal configuration, so ask how debit routing is configured on the equipment you are being sold.

PCI scope is a hardware and architecture decision

Which self-assessment questionnaire you complete depends on how card data moves through your business, and that is decided when the system is chosen rather than at audit time. A shop floor running validated point-to-point encryption on listed devices is a different scope from a back-office PC that also runs the web store. The PCI Security Standards Council publishes the approved PIN transaction security device listings, and a device that has aged off the list is a problem well before anyone asks you for a questionnaire. Two practical checks before signing: confirm that every device being quoted appears on the current approved listing, and confirm in writing which questionnaire the proposed architecture puts you in. Also establish whether a PCI non-compliance fee exists in the processing agreement and what triggers it, because that fee is charged by the processor rather than by the Council.

The data question nobody asks until they leave

For a restaurant the POS holds the menu, the modifiers and the tip attribution. For a retailer it holds the product catalogue, cost prices, supplier records and often the customer list. That data is usually the real cost of changing systems, and it is the item most often missing from the contract. Settle three things in writing: whether you can export the full catalogue and customer records in a standard format at any time, whether that export is available after termination and for how long, and whether stored card credentials can be migrated to another provider rather than having to be re-collected from customers. The last one matters more than it sounds, because re-collecting stored cards from a customer base is a marketing project, not an IT task, and it is quietly one of the strongest forms of lock-in in the industry.

The checklist to settle before you sign either agreement

Ten items, all of which should be answerable in writing before installation. The term length of the processing agreement and how it renews. The term length of the POS subscription and how it renews. The early termination amount on each. Whether hardware is sold, rented or financed, and who holds any lease. Whether the POS is locked to a processor. Which interchange programs your typical sale is expected to reach, and what the markup above interchange is. Whether a PCI non-compliance fee, monthly minimum, statement fee or batch fee exists and what each costs. How debit routing is configured. What the data export rights are, during and after the agreement. And who you call at 7pm on a Saturday. A provider who answers all ten in writing is telling you something useful, and so is a provider who will not. This is general information about published card network rules and federal regulations, not legal advice (September 17, 2026).

About the rate tables on this page: Visa is the only card network that publishes a public US merchant interchange schedule, so the rate tables on this site are Visa-only. Mastercard, American Express and Discover do not publish an equivalent US merchant schedule, and their rates are neither shown above nor implied by these figures. Ask your processor for the rates that apply to each network on your account.