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Cost and value

What does free POS actually cost?

A $0 offer can be a good deal. It can also be the most expensive option over three years. Here is how to tell which one you are looking at.

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The short answer

Free POS usually means one cost is $0, not the total. The software, hardware or both are paid for some other way: a higher processing rate, a multi-year term, a monthly minimum, or a fee if you leave or don’t return the equipment. Compare the total over the full term, at your own card volume, including the cost of leaving.

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General best practice

Where the cost goes when POS is “free”

  • A higher processing rateThe hardware and software are paid off a little at a time, on every card sale. Providers that publish a $0 plan next to a paid one typically charge a higher percentage, a higher per-sale fee or both on the $0 plan.
  • A longer termFree offers often come with a two- or three-year agreement. Some renew automatically unless you give notice months before the end.
  • Minimums and inactivity feesSome $0 plans set a monthly processing minimum, or charge a fee in months with no card sales. That matters for seasonal businesses and anyone who closes for a stretch.
  • What you owe if you leaveEquipment you don’t own usually has to be returned on time, or you pay a set amount per device. Some agreements charge a termination amount based on the months left, or take back a hardware discount if you leave early.

General best practice

Buy, finance, lease or “free” hardware

The same screen can cost very different amounts depending on how it is paid for. Ask for the total of all payments, who owns the equipment and what happens to it if you leave.

  • BuyThe most cash up front and usually the lowest total. You own it — though some hardware only works with one provider’s software or processing.
  • Finance or subscriptionLess cash up front; the total of all payments is usually higher than paying in full. You own it once it is paid off; leaving early usually means paying the balance.
  • LeaseLow cash up front, often the highest total, and the lease may be a separate contract you cannot cancel even if you change processors. The leasing company owns the equipment.
  • “Free” with processingNo cash up front; the cost is built into the rate, the term or a minimum. Ownership varies: you may own it, or have to return it or repay a discount if you leave.

General best practice

Free hardware does not always mean the lowest total cost.

ILLUSTRATIVE — not a quote and not any provider’s pricing. The same café weighs two offers over the same 24 months. Which one costs less depends on how much it sells by card.

  • Plan A · “Free” hardware

    $0 hardware and software · 3.0% + 15¢ per card sale

  • Plan B · Buy the hardware

    $1,500 hardware up front · $60 a month software · 2.6% + 10¢ per card sale

  • Lower volume

    $8,000 a month in card sales (500 sales averaging $16)

    Plan ACosts less$7,560

    Over 24 months: $315/mo

    Plan B$9,132

    Over 24 months: $318/mo + $1,500 hardware

    The $0 offer costs about $1,570 lessAt this volume the lower rate saves almost nothing each month, so Plan B never earns back the $1,500 it spent on hardware.

  • Higher volume

    $40,000 a month in card sales (2,500 sales averaging $16)

    Plan A$37,800

    Over 24 months: $1,575/mo

    Plan BCosts less$33,900

    Over 24 months: $1,350/mo + $1,500 hardware

    Buying the hardware costs about $3,900 lessThe lower rate saves about $225 a month, so the $1,500 hardware pays for itself in about 7 months and keeps saving after that.

Where the break-even falls

With these two offers and a $16 average sale, Plan B starts costing less each month above roughly $8,400 in monthly card sales, but it takes roughly $17,000 a month for those savings to repay the $1,500 within 24 months. Below that, the $0 offer wins. Neither is always cheaper — your volume decides.

Run it with your own numbers

Total over the term = (card sales × rate + number of sales × per-sale fee + monthly fees) × months + hardware + setup + the cost of leaving.

Use the same card volume and the same number of months for every offer.

General best practice

When a free or $0 offer is the better choice

  • You are short on cash up frontPaying a little more per sale can be better than draining opening capital, as long as the term and exit costs are acceptable.
  • Your volume is low or unprovenAt low card volume the rate difference costs less than buying hardware, as the $8,000-a-month example shows.
  • You may change course within a yearA pop-up, a seasonal stand or a lease you may not renew. Check the term and exactly what leaving costs first.
  • The offer includes setup you would otherwise pay forMenu or product import, training or support you would otherwise buy separately. Get what is included in writing.

General best practice

What a “free” offer should tell you in writing

  • Every rateThe processing rate for tapped, keyed and online sales, and for every card brand.
  • Every feeEach monthly fee, minimum and inactivity fee, and when each applies.
  • The termHow long it runs, whether it renews automatically and the notice window to stop it.
  • The equipmentWho owns it, and what happens to it if you leave.
  • The cost of leavingThe exact amount you would owe if you left in month 13, and whether you can change processors and keep the equipment.
  • What setup includesWhat installation, programming, training and support include, and what costs extra.

Questions owners ask

Common questions

Is free POS really free?
Usually one cost is $0, not the total. A $0 plan typically pairs free hardware or software with a higher processing rate, a two- or three-year term, a monthly minimum, or return-or-pay terms for the equipment.
How do free POS companies make money?
Mostly through card processing: a higher rate or per-sale fee on every card payment pays for the hardware and software over time. Some also charge monthly minimums, add-on fees or a termination amount.
Do I own the hardware on a free plan?
It depends on the agreement. Some providers let you keep it but require you to return it if you cancel; others charge a fee per device that is not returned. Ask before you sign.
What happens if I cancel a free POS agreement early?
Read the termination section. Agreements can charge a set termination amount, an amount based on the months left, a fee for each device not returned, or take back a hardware discount if you leave within a set period.
Is a $0 plan ever the cheaper option?
Yes. At low or seasonal card volume, the higher rate can cost less than buying hardware or paying a monthly software fee. Run both offers at your own volume over the same number of months.
Is it cheaper to pay for hardware over time?
Usually not overall: the total of the payments is normally higher than paying in full. It can still make sense if it keeps cash available, as long as you know the total and what happens if you leave.
Can I use a free POS with a different card processor?
Often not. Many free or $0 offers require the provider’s own processing, and the equipment may not work with anyone else. Ask whether you can change processors and keep the equipment.
Are leased card terminals a good deal?
Compare the total of all lease payments with the purchase price, and check whether the lease can be cancelled. The FTC has warned that some sellers presented multi-year, non-cancellable terminal leases as free.

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