I once got a call from a Senior Vice President of Investments from a large bank. We spoke for a bit and set up a meeting. At the meeting he asked me to help him setup a private company of his for credit card processing. I told him I could easily set up his business to be able to take credit cards as payment, but the real question was, “Why me? Your bank can set up merchant accounts.” His answer was very straightforward: I wouldn’t charge him $750 for a machine like his bank. I would help him get it for free, or at cost.
This man’s office was huge. Not big, people. HUGE. You could have a great game of Frisbee tag in there and never hit a wall (Frisbees only go so far). Why in the world would his own bank try and charge him $750 for a terminal that is often given away, or that he could buy new for $250? Because they could, and it’s just what they were charging everyone that got a merchant account from them. It’s kind of insane.
Before you ever get grifted in this way make sure to know the rules. That machine is not worth losing the deal to the company you are speaking. If it’s between having your account or losing your account, they’ll almost always go with having you. They will make much more money over time from the account than the hardware. Think of it like a cell phone. If you get the cell plan, they will give you a phone for free. Is that because they are such great guys and you are so, so very good looking? That’s got to be part of it as you are really quite striking, but the main reason is they need you on the phone making calls. It’s how they make money. The phone is the means to the end.
Be willing to walk away. The companies that set up credit card processing for businesses like yours to take plastic as payment, have tons of competition. If this company doesn’t want your business enough not to abuse you on the hardware then walk away. It’s like my daddy always said, “Vote with your feet.”
Another option is to not get the hardware from them. Ask the company to whom you are talking about what machines they use and accept. Then go online and price them. Often times you can get a refurbished machine for $80-120. A refurbished machine is just fine and many of these machines will become obsolete before they stop working.
When looking for a machine, beware of ads that offer it for a $0.01. This is just clickbait and it means you get the account from them and the machine only works with them. More times than not, these accounts rates have been too high for my taste.
Finally, simply remember that you have bargaining power. The companies you are speaking with want your account. They want your business to process your sales through them. That is where all their money lies. Anything else they sell you is just a hobby.