![]() Without question, counter set readers are the most popular and widely used card reader today. The most popular readers come in three types: Countertop, Mobile, and Portable. What about the types of card available for your small business to use? With their Apple Pay or Google Pay app active, the customer just has to hold their device near a credit card reader to initiate the payment. With this technology, a consumer’s credit card data is stored within their handheld device or wearable tech – an Apple iPhone or Watch for instance. However, most now associate contactless payments with the use of a smartphone. The other major form of card payment seeing an increase in popularity is contactless payments.Īs we mentioned, certain credit cards already support this by way of the chip insert using near field communication (NFC) or radio-frequency identification (RFID). Due to its level of encryption, EMV promotes a more secure transfer of information during the transaction. The most significant benefit of the chip, however, is the increased security. What is quickly becoming the go-to form of credit card payment, chip-enabled credit cards are those with small squares on the front of the card.Īlso called EMV (Europay, MasterCard, Visa), this square or chip allows a user to make a contact payment – inserting the card into a reader – or contactless payment – holding the card near a terminal or by simply tapping the reader.Ĭredit cards with the chip technology may support one or both payment actions. Today, there are faster, more secure ways for you to collect payments from your customers, one of which doesn’t involve a physical card at all. New advances in technology and a greater concern for security has turned the swipe into a novelty. When swiped, the reader took the info stored in the black, magnetic stripe or magstripe, and sent it to the bank, which kicked the transaction into high gear. Not that long ago payment with a credit card involved a simple swipe – nothing more, nothing less. Typically, many payments are moved in one big batch, which is why this process is often called “batching.” Step #3: SettlementĪfter the transaction has been authorized and captured, the funds from the credit card sale are settled through your credit card company’s systems and deposited in your account. Once the transaction has been authorized, the funds are moved from the credit card company to the acquiring bank. If everything is in order, the transaction is authorized, and a hold is put on the funds so that they can’t be used for anything else. ![]() The issuing bank also uses fraud detection methods to ensure that the transaction is not fraudulent. The issuing bank then checks to ensure that the customer has enough funds for the charge. They send the authorization request to the issuing bank (your credit card company). The acquiring bank acts as the middle man in the transaction. ![]() They then pass the transaction to a financial institution known as the acquiring bank (also known as the merchant bank or acquirer). When you tap or swipe your credit card, the payment request is sent to the credit card company. The first step is to authorize the transaction. Generally speaking, three basic steps occur when you use your credit card to make a purchase. We’re also going to help you make the best choice in terms of which one you should use in your small business. We’re going to break down the what, why, and how of credit card readers. You insert your plastic card, and within a few moments, the reader contacts your bank, checks if you have the proper balance, withdraws the money, and credits it to the seller.īut what is going on behind the scenes? And when it comes to your small business, what are the best credit card readers? If you think about it, credit card readers are pretty amazing. We do it so often that we rarely, if ever think about how credit card readers work. We use credit card readers hundreds, if not thousands of times every year.
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