If you do business with customers face-to-face and want to accept credit cards, you need to get a credit card machine. The credit card machine reads the information from the customer's credit or debit card, encrypts the information and sends it along with the purchase amount to your credit card processor. The credit card processor then sends the information to the cardholder's issuing bank, where the transaction is either approved or declined. If it is declined, this will be relayed back to your credit card machine so you can ask the customer for another form of payment. If it's approved, the process of transferring the money from the customer's account to your account is initiated.
How to get a credit card machine
Your credit card machine must be compatible with your credit card processor, and most businesses buy their credit card machines from their processor. There are various highly rated credit card processors. Part of why you might choose one over the other is the types of credit card machines they have available. Your credit card processor is likely to offer various kinds of credit card machines at different price points so that you can choose the best one for your business.
Types of credit card machines
The best kind of credit card machine depends very much on the type of business you have and where you do business. Below are the different types of credit card processing machines, their functionality and what kinds of businesses they are best suited for.
Wired credit card terminals
These devices are connected to the internet via Ethernet or phone line, or to an internet-enabled point-of-sale (POS) system with a wire. They may or may not have a numeric pad that enables customers to enter their debit card's personal identification number (PIN). They are usually 4 to 6 inches long and 4 inches wide. Some have the ability to print receipts, and others can connect to a stand-alone receipt printer.
Having a credit card terminal with a PIN pad can benefit you because some credit card processing companies charge a lower transaction rate for debit card transactions with a PIN than for credit card or debit card transactions without a PIN.
Best for:
- Brick-and-mortar sales at a fixed location and one or more cashier stations
Wireless/mobile credit card readers
There are two types of wireless credit card machines: Wi-Fi and Bluetooth. Wi-Fi readers connect to the internet through the business's wireless router or gateway. Some Wi-Fi credit card readers have a wire to plug into an electrical outlet, while others have a rechargeable battery. Bluetooth credit card readers use this technology to connect to an internet-connected mobile phone or tablet, although a few of them are capable of offline transactions if the internet signal is too weak or not available. In this case, payments are processed later, once an internet connection is established.
Best for:
- Mobile businesses like food trucks, businesses offering delivery, in-home services
- Brick-and-mortar businesses that have long lines to pay (cashiers can bring the mobile readers to customers in line to speed checkout)
POS systems and smart terminals
This type of system is the most complex and has the most functionality. It uses specialized POS software and displays products and services with their prices on a screen that the cashier can select from there. There may be the option to add services like warranties or shipping, capture the customer's name and other information, and input coupons or other promotions and discounts.
The best POS systems allow merchants to use the system for other parts of their business as well, such as managing inventory, scheduling employees, managing customer profiles or sending orders to kitchen staff for restaurants. They also give business owners the ability to generate reports by total sales, product, location and other criteria.
The main difference between a POS system and a smart terminal is that a POS system is a fixed device that stays at the cashier location, while a smart terminal has the POS software loaded on a wirelessly connected (Wi-Fi or cellular) tablet that can be taken to different locations. Some POS systems have an integrated credit card reader, while others connect to an external reader. Smart terminals require an external reader, which is usually connected via Bluetooth.
Best for:
- Brick-and-mortar businesses with a variety of product and service choices
- Businesses looking for a comprehensive business management/payment software solution
Self-service kiosks
Self-service kiosks eliminate the need for a human cashier at each payment location. They are freestanding devices that have an integrated POS system and credit card reader, as well as the ability for customers to scan product barcodes with an integrated scanner and/or a handheld scanner.
More and more retailers are using these, replacing some or all of their human-run cashier stations. With more of these kiosks, retailers can optimize space and shorten checkout lines.
Best for:
- Brick-and-mortar retailers with long lines, such as big-box stores (Home Depot, Walmart) and grocery stores
- Fast food restaurants (without the scanning capability) to process payments and preorders for food
- Vending-type machines for small, higher-value products such as postage stamps
Payment types
Before deciding on a specific credit card machine, you first need to know exactly which types of payments you want to accept. As a business owner, one of your main goals is to generate as much sales revenue as possible. One way to do this is to make it convenient and easy for customers to pay you by accepting multiple payment types. Most credit card machines can accept credit cards and debit cards, but there are differences in their physical and processing capabilities.
Physical capabilities
- Swipe: Traditional credit cards use a magnetic stripe on the back of the card that is swiped through the credit card reader.
- Insert: To improve security, many newer cards, called EMV cards, also contain a chip. EMV cards must be inserted into a particular slot in the credit card reader.
- Tap: The newest security technology for credit cards is near-field communication, or NFC. This is a contactless wireless technology where the customer holds the card very close to a designated area on the credit card reader.
Processing capabilities
While most credit card processors enable merchants to accept the major credit cards (Visa, Mastercard, Discover and American Express), some also allow you to accept other forms of payment. Their credit card readers also process these alternative payment types.
Digital wallets
These are digital, contactless payments that utilize the NFC technology along with the customer's mobile smartphone. The customer opens and logs into a payment app and holds the phone over the tap area on the credit card reader to complete payment. The app sources payment from a credit or debit card that the customer has previously added to the app. All payment information is encrypted in a different way for every transaction, making it very secure.
P2P
"P2P" stands for "peer-to-peer" and describes payment methods that were initially designed to easily allow users to send money digitally to their friends or family. P2P works very similarly to digital wallets with a mobile phone app. The main difference is that while some users link the app to some funding source like a credit card or bank account, they can also link it to a separate account that can hold its own funds.
Within the past few years, these P2P providers have branched out into merchant services, allowing businesses to use them as a form of payment. The two most popular merchant-enabled P2P systems are PayPal and Venmo.
The advantage of accepting digital wallets and P2P payments is that it gives your business access to customers you might otherwise have been unable to sell to. Both of these payment forms are popular with millennials and Gen Z consumers, and P2P is also used by some of the 14 million American adults who do not have any kind of bank account or credit card.
Credit card machine recommendations
Best wired credit card terminal: Dejavoo Z8 Tri Comm
The Dejavoo Z8 Tri Comm terminal can connect via Ethernet or Wi-Fi. It has a color LCD screen and a privacy-screened PIN pad for debit transactions. It accepts swiped, tapped and inserted cards; Apple Pay; Samsung Pay; Google Pay; Visa payWave; and Mastercard PayPass NFC payments. It also has a built-in receipt printer in a compact device.
This card reader is compatible with multiple credit card processors, including Fattmerchant, and costs $99 to $299. Fattmerchant charges just a monthly fee rather than a transaction rate, with small business plans starting at $99 per month for up to $500,000 in annual processing. Learn more in our full review of Fattmerchant.
Best wireless mobile reader: PayPal Zettle
The PayPal Zettle mobile reader is compact and attractive. It comes in black or white and includes a PIN pad. It takes chip, magnetic stripe and NFC cards, as well as Apple Pay, Samsung Pay, PayPal and Google Pay. It also comes with Zettle's POS software for free.
The battery lasts eight hours, or about 100 transactions, between charges. The first Zettle mobile card reader is $29 when you sign up for Zettle payment processing, and additional units are $79 each. You can use this reader only with PayPal Zettle, which has a competitive transaction rate of 2.29% + $0.09. Learn more in our full review of PayPal.
Best POS system with integrated payments: Square Register
Square Register is an integrated POS system with two digital screens: a product selection screen facing the cashier and a payment screen facing the customer. It is sleek and attractive, and takes credit and debit cards by swiping, dipping and tapping, as well as NFC payments with Apple Pay, Google Pay and Samsung Pay. The customer-facing screen provides a digital PIN pad. Compatible accessories, such as a cash drawer, receipt printer and handheld scanner, are sold separately. The Square Register costs $799, including the POS software, which is the most comprehensive retail and restaurant industry-specific POS systems on the market.
The Square Register is compatible only with Square payment processing, which costs 2.6% + $0.10, with no monthly fee for the basic plan. Learn more in our review of Square.
Best self-service kiosk: Ingenico Self/2000
The Ingenico Self/2000 is a payment terminal that integrates with a self-service kiosk or vending machine and can be used inside or outside. It accepts NFC and chip cards, Apple Pay and Google Pay. The device has an LCD color touchscreen and a camera for scanning QR codes. It can integrate with an external speaker for sound alerts and voice prompts, and has Bluetooth and 4G connectivity. Contact the manufacturer for custom pricing.