Worked costings and choosing a provider
EFTPOS terminals: rent or buy? A cost comparison for Australian businesses
Compare renting and buying card terminals on total cost, payback and contract terms, with a worked example, the hidden equipment fees to check, and tap-to-pay on phones.
Buying a card terminal usually costs less over two or three years than renting one, if the processing plan that comes with it is competitive and you would not otherwise need the rental's replacement and support. Renting spreads the cost and often includes repairs and swaps, but the rental continues for as long as you keep the terminal and is often tied to a fixed-term agreement. In the illustrative example below, buying two terminals and paying a $200 exit fee costs $900 up front and pays back in about 1.07 years against $840 a year of rental, saving $1,620 over three years. Always compare the whole package, because a plan with cheap terminals and a higher transaction rate can cost more overall.
This guide is part of the best-fit selection guide. All prices are illustrative, not any provider's current prices.
Equipment options
| Option | How you pay | Often fits | Watch out for |
|---|---|---|---|
| Rented countertop or portable terminal | Monthly rental per terminal | Businesses that want swaps and support included | Rental for the life of the agreement; return and loss fees |
| Bought terminal from a payment facilitator | One-off purchase | New and small businesses | Terminal may work only with that provider; replacement cost when it fails |
| Integrated POS terminal | Rental or purchase, often bundled with POS software | Hospitality and retail with POS | Payments may be hard to unbundle; check exit costs |
| Tap-to-pay on a phone | Usually no hardware; per-payment fees | Mobile, low-volume, trades | Phone compatibility, device security, receipts |
| Mobile card reader paired with a phone | Low one-off price | Market stalls, events | Battery, connectivity, durability |
Worked example: two terminals
Illustrative figures for a shop with two terminals:
| Item | Rent | Buy |
|---|---|---|
| Up-front cost | $0 | 2 × $350 = $700 |
| Exit fee to leave current rental | $0 | $200 |
| Monthly rental | 2 × $35 = $70 | $0 |
| Yearly equipment cost | $840 | $0 |
| Three-year equipment cost | $2,520 | $900 |
Payback = one-off cost ÷ yearly saving = $900 ÷ $840 = 1.07 years (about 13 months). Three-year saving = $2,520 − $900 = $1,620.
The terminal and switching payback calculator does this with your own numbers; its default inputs are this example.
Now include the processing plan
Terminals come with a processing plan. Suppose (illustrative) the rental plan charges a blended 1.1% and the buy option comes with a flat 1.4%, on $25,000 of monthly card takings:
- Rental plan: $25,000 × 1.1% = $275 + $70 rental = $345 a month
- Buy plan: $25,000 × 1.4% = $350 a month, no rental
- The buy option now costs $5 a month more, so the $900 up-front cost never pays back on these figures.
At $10,000 a month, the rental plan costs $110 + $70 = $180 and the buy plan $140, a saving of $40 a month ($480 a year), with payback of $900 ÷ $480 = 1.9 years. The cheaper equipment option depends on your volume. Use the card fee calculator for the transaction side.
Hidden equipment costs to check
- Connectivity: SIM or mobile data fees for portable terminals.
- Replacement: cost and turnaround if a bought terminal fails; whether a rental swap is free and how fast.
- Damage and loss: rental agreements often charge if a terminal is lost, stolen or damaged.
- Return conditions: fees for late or missing returns when a rental ends.
- Software and support: some bought terminals need paid software or support plans.
- Paper rolls and accessories: small, but they add up.
- Locked equipment: a bought terminal may work only with one provider, so it has no resale or switch value.
Contract points for rentals
- Is the rental part of the merchant agreement or a separate equipment rental or lease agreement? A separate agreement, sometimes with a different company, can continue even if you close the merchant facility.
- What is the minimum term and early termination fee?
- Does the rental automatically continue after the term?
- Can you return terminals you no longer need without a fee?
- Are rental increases allowed during the term?
Standard-form contracts with small businesses are covered by the unfair contract terms rules. See merchant agreements and exit fees.
Tax treatment
Rental is generally a deductible expense. A bought terminal is a depreciating asset; small businesses may be able to deduct it immediately under the instant asset write-off when it is available, so check the current threshold and dates with the ATO. See GST and tax on merchant fees and terminals.
Frequently asked questions
Can I use a terminal bought from one provider with another?
Often not. Many terminals are locked to the provider that sold them. Ask before you buy.
Are rental terminals better for busy venues?
They can be, if the rental includes fast swap-outs and support, because a broken terminal costs sales. Compare the swap promise in writing.
Is tap-to-pay on a phone secure?
It is designed to be, but you are responsible for keeping the device updated and secured. Follow the provider's requirements and see PCI DSS for small business.
Sources
- Australian Competition and Consumer Commission — unfair contract terms and consumer guarantees for business purchases
- Australian Taxation Office — depreciation and the instant asset write-off
- Australian Small Business and Family Enterprise Ombudsman — equipment and contract disputes
