Leasing Terminals with Cash Discounting – Good or Bad?

Welcome to this third episode in the series “how to sell cash discounting.”  Join me in thinking through a controversial topic today.  Leasing terminals – SHOULD you, or SHOULDN’T you?  Decide whether leasing is an issue of right and wrong.  Make your decision then make your sales presentation.  There is much bantering back and forth in our industry on this important topic.  Some of you are saying, “Yes!  Everybody should lease a terminal.  That’s how you make money in the industry.”  Others say, “Oh, everybody who leases a terminal is evil and wicked and terrible!  Leasing just isn’t a moral thing to do.”

Read previous article here:  http://www.ccsalespro.com/stop-end-month-billing-cash-discounting/  Stop End of Month Billing for Cash Discounting

From my perspective, leasing is neither good nor bad.  Leasing is a decision.  The decision will affect your merchants and your pocketbook.  The first and most important consideration in making this decision is COMPETITION. 

Here is an example from my personal experience.  Recently I paid $2,600 for a new thirteen-inch MacBook Pro.  I could have gotten a similar machine from a PC for $1,600 or $1,700.  There was a competitive advantage to my getting the MacBook Pro rather than the less expensive option.  I like the MacBook; it’s simpler for me to use; it’s better for programming – there was a value proposition.  Is it morally wrong for Apple to charge $2,600 when HP is charging $1,600?  No, that was their price!  I make the decision which option to choose.

The circumstance is similar when selling cash discounting.  There are going to be companies offering free terminals with cash discounting.  And there are going to be those offering leasing with cash discounting.  Neither option is morally wrong.  You must understand your value proposition.

The set-up and pricing you provide merchants determines whether leasing is moral or not.  Are you setting up in a way which can be managed well?  Are you providing a good level of service?  Are you ensuring merchants get the right signage and do all the right notifications?  Are you learning correctly how to sell cash discounting?  Cash discounting uses a legitimately different type of terminal.  There is a different program which runs in the terminal.  That is one reason, in my opinion, why leasing the terminal is acceptable as long as the set-up is done correctly.

My goal in this episode is to encourage you to take an objective viewpoint on this subject.  Take a step back and realize you don’t want to be the drone who says, “But my processor says…” rather than making objective decisions based on facts.  There is a way to make money for yourself AND offer a good deal to the merchants.

>For those who have been offering only free terminals forever, please step down from the moral high ground and open your mind for a second.  Understand you work for a massive processor who has 200 to 400 thousand merchant accounts.  Of course, the processor doesn’t want you to lease terminals because they make little, if any, money off a lease.  They want their reps to just landgrab and get as many accounts as possible.  Leasing is bad for them, so they don’t promote it.  Consider the numbers for YOU though.  Would you rather get ten sales a month, making $500 on each sale or thirteen sales a month, making only $200 a sale?

I am not a huge fan of leasing terminals on standard merchant accounts.  Not because I think it’s wrong.  Rather, I think it slows your sales cycle too much.  To do leases can be harder since so many sales people offer free terminals.  There are some reps who do a great job with it; that’s awesome!  However, we are discussing cash discounting rather than standard accounts!  With cash discounting, you are already saving merchants about 90% of their fees.  Adding $29.95 a month lease onto the deal is not a terrible thing.  From an objective viewpoint you should say, “Hey, I’m trying to build a business here.  If I can make $800 a sale instead of $200, that’s a good thing.  Maybe I lose 20% of the accounts.  That’s fine.”   Understand there ARE options!

 >I highly recommend you have different options available.  Having the option of the free terminal is nice.  But you definitely want the option to lease, also.  Make sure you have the lease option with a company who knows how to lease terminals.  Don’t get involved in a third-party relationship.  You need a processor who has cash discounting and leasing integrated into one program.  The two do go together very nicely.    Right now, most sales people doing cash discounting are leasing terminals.  So, from a competitive standpoint, it makes sense.  The option to do a free terminal is helpful in some cases, such as a really small merchant.

I realize some of you think I’ve “gone to the dark side.”  But I believe leasing a terminal with cash discounting does, at the very least, make sense.  Maybe you should start thinking about yourself, because this IS a business rather than a non-profit.  So, consider what is going to make you money.  I don’t condone a rip-off for the merchant.  You might provide a little bit lower cash discount or whatever makes you feel good about the deal you offer.  The idea of making five to eight hundred dollars on every single sale you make might help you and your family.  Isn’t that more important than preserving this hypothetical imaginary moral high ground?

Step back and take an objective look at the situation.  Decide if you want to lease terminals before we move forward.  Don’t miss the rest of this series.  I’ll help you put your sales presentation together.

Read the next article here:  http://bit.ly/2CUsgjj  Consumer’s React to Cash Discounting – Here’s what they’re doing