Point-of-sale (POS) systems are the hardware and software tools businesses use to accept payments and record customer transactions. POS startup fees can be expensive, so some providers offer leasing or payment plan options for hardware. Software is purchased as a one-time license fee or as a monthly or annual subscription.
POS Leasing: Who It Is Right For
In most cases, small businesses purchase a POS system by paying for hardware outright and paying a monthly subscription fee for the software. This is especially true if you are a small business such as a retail store or coffee shop and just need one register or terminal. However, there are a few cases in which businesses might decide to lease a POS system.
POS leasing may be right for:
- Restaurants: Restaurants often need several terminals, which can be pricey — leasing reduces the upfront costs of installing a restaurant POS.
- Multi-store operations: Businesses that need a lot of equipment may opt to lease a POS instead of purchasing outright to ease the upfront financial costs.
- New businesses: New businesses may choose to lease a POS because they are strapped for cash or want to test a system before purchasing hardware in full.
- Businesses switching POS systems: Many systems operate on hardware like iPads or desktops that can be used with multiple programs. However, some POS systems have proprietary hardware—you may want to test out these systems with a lease before committing to purchasing outright.
Revel Systems is a popular cloud-based POS system for restaurant, cafe, and retail businesses that offers leasing on hardware including Apple products, payment terminals, printers, and more. Additionally, Revel Systems has leasing options for POS installation and training services. Leasing applications are simple, and greatly reduce the upfront costs of implementing a POS system. Visit Revel Systems to learn more about their flexible payment options.
POS Rentals vs Leasing
Leasing a POS usually means financing a hardware purchase to reduce upfront costs. At the end of a lease, there are typically options to renew, exchange for different equipment, or to take ownership of the product. Some businesses will instead choose to rent a POS system, which also involves making a regular payment, but typically has a set end date and is not applied toward a future purchase.
POS rentals may be right for:
- Temporary businesses: Seasonal or short-term businesses may choose to lease systems instead of purchasing.
- Events: Large events require lots of equipment, but not long-term ownership.
How to Lease a POS System in 3 Steps
If you want to lease a POS system, the most important step is figuring out which POS system is right for your business. There are several systems that have free POS software, which is suitable for tiny businesses. There are also many specialized retail POS systems that have sophisticated inventory and customer management. Restaurant POS systems have features for managing orders and front-of-house operations. It will take some shopping around to find the best system for your business.
Here’s how to lease a POS system in three steps:
1. List Your POS System Needs
All POS systems should have tools to process customer transactions including sales and refunds. POS systems also offer reports on sales totals and products sold and allow businesses to create customer directories with contact information. Industry-specific systems provide inventory tracking and more detailed reporting. The type of POS system that will be best for you depends on what kind of business you have.
Here are some common features different POS systems have and who they are best for:
- Payment processing: All businesses need a POS system that can accept credit cards. Many POS systems also process ACH payments, gift cards, and offer flexible payment options like deposits, layaway, and store credit.
- Inventory management: Most POS systems offer a basic product catalog so businesses can track products sold. Retailers will need more advanced inventory management with variants and barcoding. Restaurants need ingredient-level real-time tracking and low-stock alerts.
- Menu management: Restaurants and cafes need a POS that can display different menus and pricing.
- Customer data collection: Retailers and specialty shops need a POS that tracks transactions by customer, preferences, and has built-in loyalty and targeted marketing features.
- Offline payment processing: Mobile sellers such as food trucks, pop-up shops, and market vendors need a POS that can accept payments offline.
- Online sales: Local businesses also need a POS that has a connected website with synced inventory management for online orders.
- Table mapping and reservation management: Sit-down restaurants need a POS that has features to manage customer tables including wait times and reservations.
- Reporting: Most businesses need a POS that can offer detailed sales, inventory, and customer reports.
- Integrations: Most businesses will want a POS system that has accounting integrations. Many will also want options for marketing, CRM, ecommerce, and employee management.
- Professional installation: Some companies offer professional installation to set up a POS, especially businesses like restaurants that need multiple terminals and types of hardware.
2. Compare POS Leasing Providers
Once you narrow down what features are important for your POS to have, you need to compare providers. Not all systems will have the exact features you are looking for, so break up your feature list into “Must-Haves” and “Like to Haves.” Then, set a budget. Decide the maximum amount you can spend per month on a POS system.
When deciding to lease a POS system, you’ll want to take time to demo several software programs before choosing. All POS providers should offer a free demo and walk-through. Many offer free 14- or 30-day trials to test the system for yourself.
3. Negotiate a POS Lease or Contract
Once you select a POS system, you’ll need to negotiate and sign your contract. Ideally, you’ll be able to sign a month-to-month option that you can cancel with a 30-day notice. However, if you are leasing equipment, it’s likely that you will sign a one-year lease. Some POS systems require a three- or five-year lease.
Other POS systems offer financing for hardware purchases. So, there is no cancellation option, but you can reduce upfront costs by applying for a payment plan. For example, Revel Systems offers financing on iPads and other Apple hardware, payment swipers, printers, installation, and training services.
What to Look For in a POS Contract
When negotiating a POS lease or contract, of course, you want the best rates and value. You also want to avoid any surprises from additional fees or features that were not included in the original agreement. Product updates, customer support, and payment processing fees all vary greatly by provider.
Here are a few things to look for in a POS system contract:
- Cancellation fees: Look for a POS system that does not charge cancellation fees, and make sure that point is outlined in any agreements or contracts.
- Support fees: Some POS providers charge extra for live user support, or only offer live support for certain plans; make sure to negotiate for free live customer support in your agreement.
- Annual fees: Ask about any annual or renewal fees.
- Software upgrades: If you choose a cloud-based POS system that has a monthly or annual subscription, you should have free software upgrades; if you purchase a POS that is locally installed or license-based, you may need to negotiate for free product upgrades.
- Payment processing fees: Some POS systems have built-in payment processing; make sure to negotiate for a competitive rate.
Pros and Cons of POS Leasing
Most cloud-based POS systems will cost between $500 to $3,000 per terminal to set up, including hardware, software, and any accessories. Many businesses choose to purchase the equipment outright. However, there are some advantages to leasing a POS system instead of buying.
Pros of Leasing a POS System
Leasing a POS system makes obtaining a quality payment processing and business management system more accessible for new and small businesses that do not have the cash flow to purchase new hardware outright. Many POS systems that require specialized hardware or run on Apple iPads offer leasing or financing options.
- Small upfront investment: Leasing a POS spreads the payments out over years, instead of having to pay the entire sum upfront.
- Eventual ownership: At the end of a lease, there is usually a buyout option for the equipment, or the option to renew or upgrade.
- Easy to obtain: Although leasing a POS will likely still require a credit check, it is typically easier to qualify for leasing than financing.
Cons of Leasing a POS System
Leasing POS hardware makes the initial investment smaller. However, one of the biggest drawbacks to leasing a POS is that with regular payments and interest fees you will pay more over time. Leasing agreements can also require credit checks, which may preclude brand-new businesses or individuals with poor credit history.
- Interest payments: A lease agreement comes with interest payments; at the end of a lease, you will have paid more for the POS that if you purchase outright.
- Possible cancellation fees: If something changes with your business and you no longer need or can afford a POS, there may be fees or penalties for canceling.
- Limited flexibility during lease: POS technology is continually evolving, and it may not be possible to upgrade to new hardware during your lease period.
Alternatives to Leasing POS Systems
If leasing a POS system does not sound right for you, there are plenty of other options available. As mentioned above, renting is a popular alternative to leasing a POS system, especially for businesses that only need POS equipment for a limited time, such as seasonal businesses or events.
Download POS Apps onto Existing Hardware
Many POS systems are browser-based. That means you can use the software on any computer or tablet that is connected to the internet. As long as you already own a compatible laptop, desktop, or tablet, choosing a browser-based POS can greatly reduce your hardware costs. Many other POS systems run on an iOS app. That means you can operate the POS software on a compatible iPad or iPhone.
Purchase POS Equipment
Instead of leasing POS equipment, you can choose to purchase the hardware outright. This is a common choice for many small businesses, especially if you only need one or two terminals. If you can afford to purchase equipment upfront, it will be less expensive than leasing in the long term because there are no interest charges.
Finance POS Purchases
Some POS providers offer financing for businesses that want to purchase the equipment outright. Financing is like taking out a small loan with the POS provider to purchase equipment. Like leasing, financing typically comes with interest fees and a credit check or application. However, with financing, you own the POS equipment.
Lease a POS System Frequently Asked Questions (FAQs)
Choosing the right POS system for your business is an important decision. Figuring out the best way to pay for hardware can be a confusing part of that process.
When would I need to lease a POS system?
Leasing a POS system is a good option for larger restaurants, grocery stores, department stores, or any business that requires multiple payment terminals. The biggest upfront expense for POS systems is often the tablet or computer that the software operates on, especially if you need multiple terminals. Leasing a POS would reduce upfront expenses.
What equipment should come with my leased POS system?
Every POS system needs a computer or tablet to run the software program and a credit card reader for accepting payments. Depending on the type of business you have, you may also need a cash drawer, receipt printer, and barcode scanner. Some businesses such as quick-service restaurants also may want a customer-facing display or self-order kiosk.
When should I purchase POS equipment instead of leasing?
If you have the cash on hand, purchasing POS equipment is typically better than leasing because you will not have interest fees or payments. However, new and small businesses do not always have the capital required to purchase a larger POS system in full.
POS leasing reduces the upfront costs of implementing a POS in your new or growing business, which is important if you require multiple terminals or registers. To lease a POS system, find the software program that’s best for your business, choose the hardware you need, and negotiate a competitive agreement with the provider.