What is a card reader and how does it work?Product Information 4 June 2018
From supermarkets and bars to festivals and taxis, credit card readers are everywhere these days. The speed and ease of paying via Chip and PIN, contactless, or via a mobile device has become the norm for many businesses.
What is a credit card reader?
A credit card reader is a device that provides retailers with a fast, efficient, and secure way to process payments electronically from their customers. Widely used in supermarkets, bars, shops and anywhere that accepts contactless, Chip and PIN, Apple Pay and Android Pay, there are upwards of 2.2m card machines in use in the UK today.
How do credit card readers work?
Credit card readers read credit or debit card information and then communicate the transaction details to the customer’s bank or credit card network, which will then either authorise or decline the payment. Here are the steps involved in processing payments:
- Customer presents their card or mobile device, allowing the card reader to read the details.
- The retailer’s merchant bank then sends a request to the credit or debit card provider (such as Visa) to verify the card and receive payment authorisation from the customer’s bank.
- The card-issuing bank will check to see whether there are available funds in the customer’s account to make the payment.
- Once the bank authorises the payment, a signal is sent back to the card machine and a receipt is printed for the customer’s proof of purchase.
- The retailer’s bank will usually receive the funds from the customer’s bank a few days later.
Three types of credit card readers
There are three types of credit card readers available, allowing all business types to take advantage of a payment solution to fit them:
Countertop card machines are the most popular terminal, and have been widely adopted by the retail industry, including major supermarkets and department stores. Countertop machines are wired, plugging straight into a phone or broadband line to provide the super-fast transactions that consumers have come to expect from major retailers.
Portable card readers are the perfect payment solution within the hospitality sector, allowing you to take customer payments around your restaurant, bar, café, or pub. Featuring a long-life battery and a powerful 100m range via Bluetooth or Wi-Fi, portable card readers are also compact enough to be carried with ease.
If your business is constantly on the move, a mobile card reader moves with you, allowing you to take payments wherever you happen to be. Featuring a built-in GPRS SIM allowing you to connect with your customer’s bank, these terminals are becoming increasingly popular with taxi drivers, delivery services, and mobile beauticians.
Benefits of using card readers as a small business
As the popularity of cash payments continues to decline, more consumers expect to have the option of paying for goods and services via a card machine. Our recent research found that the popularity of contactless has seen more and more consumers favouring card payments over cash, with forecasts suggesting 27% of all UK payments will be contactless by 2026.
There are many benefits of using card readers for your small business:
- Faster and more efficient than other payment methods, card readers can reduce queues thus improving the customer experience.
- Gives your customer more choice with options to pay via contactless, Chip and PIN, Apple Pay or Android Pay.
- Sales figures and customer behaviours are recorded automatically, giving you instant access to a wealth of useful data to help keep control of stock and plan your next marketing campaigns.
- Helps reduce fraud and provides your business with a more secure way to take payments.
Credit card reader pricing and set-up fees
Paymentsense provides affordable credit card reader solutions for businesses of all shapes and sizes. Price plans and set-up costs will depend on things like size, sector, and personal requirements.
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