The short answer
Sometimes, but read what pays for it. Square's free plan has no monthly software fee, but its hardware is sold, with financing at 15% APR. Other "free" terminals are often paid back through higher rates, auto-renewing terms, cancellation fees or equipment leases. The FTC and New York's Attorney General have both acted against companies that hid those costs.
What Does a Free POS Plan Actually Charge?
Processing. Square says that with Square Free "there are no monthly subscription costs, you only pay processing fees when you take a payment," and it advertises "no hidden fees or locked-in contracts." Square also says "you do not need to purchase hardware to take payments." The cost is the rate on every sale, which is where to compare.
Who Pays for Free Hardware?
You do, one way or another. Square Terminal "costs $299 before taxes and fees," and Square's hardware installment plans carry a 15% APR. Toast offers a pay-as-you-go option with "no upfront cost" that it says is "not a lease," but its POS contracts renew automatically for one-year periods.
When a terminal is free with no visible catch, the cost is usually in the processing rate or the contract. Price it with the processing fee calculator, and see how much a POS system costs.
What Did Regulators Find in Processor and Lease Contracts?
Hidden terms. In 2022 the FTC said First American Payment Systems' standard agreement required businesses "to sign on to a three-year term with a $495 cancellation fee," and that its enrollment process "hid a three-year obligation, cancellation requirements and fees, the fact that agreements would automatically renew." The company paid $4.9 million to settle.
Equipment leases drew the same scrutiny. New York's Attorney General said Northern Leasing "trapped them in overpriced, uncancellable lease agreements for credit card processing equipment," and the court ordered relief "including an order rescinding all equipment leases obtained by Northern Leasing."
What Should You Check Before Signing?
BatchOut offers hardware three ways, free for qualifying volume, leased or bought outright, with the terms in writing.
- The effective rate on your real sales, not the headline percentage.
- The term, whether it renews automatically, and the notice needed to leave.
- Any cancellation or early termination fee, in dollars.
- Whether the hardware is bought, financed, leased or loaned, and who owns it if you leave.
- Whether a lease can be cancelled at all.
Commonly Asked Questions
Is Square really free?
Square Free has no monthly software fee; you pay processing on each sale. Hardware is sold separately, such as Square Terminal at $299, with financing at 15% APR.
What is the catch with a free credit card machine?
Usually a higher processing rate, a long contract that renews automatically, a cancellation fee, or an equipment lease. Read all four before signing.
Can I cancel a credit card machine lease?
Often not easily. New York's Attorney General described Northern Leasing's processing equipment leases as uncancellable, and a court ordered them rescinded. Check the cancellation terms before you sign.
What did the FTC find about payment processor contracts?
In its 2022 case against First American Payment Systems, the FTC said the standard agreement carried a three-year term and a $495 cancellation fee that were hidden during enrollment. The company paid $4.9 million to settle.
Sources
- Square: Pricing
- Square: Hardware
- Square: Restaurants pricing
- Square: Square Terminal
- Toast Support: How customers can pay for Toast Starter Kits
- Toast Support: Point of Sale renewal FAQ
- FTC: Action against First American Payment Systems (2022)
- FTC: First American Payment Systems settlement
- New York Attorney General: Northern Leasing (2024)
- New York Attorney General: Northern Leasing FAQ
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