Free Equipment Placement

Also called free terminal, free POS, no-cost hardware program, free placement

Hardware provided at no upfront cost. It is real, and it is always paid for somewhere else - usually your rate, your term, or a clawback clause.

What it is

Free equipment placement means the processor supplies terminals or POS hardware without an upfront charge. The programs are legitimate and widespread - Fiserv's CardConnect markets a no-cost or low-cost Clover hardware program, and most acquirers run something similar - but the hardware is recovered in one of four ways. First, elevated processing rates. As an illustration, twenty extra basis points on $40,000 a month is $80 a month, which repays a $1,000 Clover station in thirteen months and then keeps going. Second, a longer contract term with an early termination fee that recovers the hardware if you leave. Third, a clawback: if the merchant closes inside a window, typically 12 to 18 months, the agent's boarding bonus is reversed and the hardware cost is charged back to the merchant or the agent. Fourth, the equipment remains the processor's property and must be returned in working condition or billed for at a non-return fee. None of these is dishonest by itself. All of them are routinely undisclosed. The clawback window in particular is universally acknowledged in the industry to exist and essentially never published. Free placement is often the right choice. A restaurant needing four Clover stations at $1,399 each is looking at $5,596 of capital it would rather deploy elsewhere, and 20 basis points is a rational financing cost. The problem is not the trade; it's making it without knowing the terms.

Why it matters to your business

Taking free equipment can be the right call - it's usually far better than a lease. But you should know what it costs. Ask what the rate would be without the hardware, and multiply the difference by your annual volume. If free placement costs 20 basis points on $480,000 a year, that's $960 a year, forever, for hardware worth $1,400. The fix is simple: negotiate a rate step-down. Ask for the elevated rate to expire after 24 or 36 months once the hardware is paid for. Processors will sometimes agree, and almost never offer it.

Where it gets contested

Free placement is the better version of the equipment lease, and it deserves credit for that. It typically doesn't involve a third-party leasing company, a personal guarantee, or a 48-month non-cancellable obligation. Merchants who take free placement instead of a lease are usually thousands of dollars ahead. The honest criticism is that 'free' is doing work the word shouldn't do. The financing cost is real, it's embedded in a rate the merchant can't decompose, and it doesn't stop when the hardware is paid off. A 20 basis point uplift financing a $1,000 terminal continues in year three, year five and year eight. Unlike a lease, there's no maturity date - just a permanently higher rate with no visible connection to the hardware. The second issue is the return and non-return terms. Merchants who close an account are frequently billed several hundred dollars per unit for equipment they thought was theirs, sometimes discovering the ownership question for the first time at cancellation. What processors don't say: the ideal free-placement merchant is one who never re-examines their rate. The financing is invisible precisely because it lives inside a number nobody recomputes.

How to check it yourself

Ask four questions before accepting free hardware, in writing. Who owns this equipment? What is the clawback window and what happens if I close inside it? What would my rate be if I bought the hardware outright? Will the rate step down once the hardware is amortized? Then keep the answers with your agreement.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

Free terminals are recovered through non-cancellable multi-year leases, elevated rates, or clawbacks if the merchant closes inside 12-18 months, and no-cost hardware programs always carry a boarding-bonus clawback window
cardconnect.com ↗
Vesting periods and clawback windows on free Clover boarding bonuses are universally acknowledged to exist but are never published
cardconnect.com ↗
Clover hardware costs $499-$1,399 and Toast $800-$2,000
orderpin.co ↗