Whether you’re a new business owner or a seasoned pro, you probably accept credit cards as a form of payment from your customers. If you don’t, you should make adding this payment acceptance solution a top item on your “to-do” list.
In this blog, we’re going to do a deep dive into the world of credit card machines, giving you an ultimate guide for running, enhancing, and growing your business in 2020. Credit card machines and processing are critical to the success and growth of today’s businesses. By understanding how credit card machines work, you can decide what elements and features are most important to your business, driving your bottom line upwards.
Here is our ultimate guide to credit card machines in 2020.
How does a credit card machine work?
When you made a purchase with a credit card back in the 1980s, the merchant placed your card in a manual reader with a carbon-backed credit card slip (also known as a knuckle-buster) and ran the card manually, gathering the imprint of your card on the carbon, and then manually entered your payment into the cash register.
Credit card machines have come a long way since then. In fact, according to the 2018 Federal Reserve Payments Study, in 2017, total credit card payments increased by 11.3 billion payments, totaling 123.5 billion in all. These credit card payments included remote payments, chip-authenticated payments (EMV), and even wearable and contactless payments.
When a customer pays by credit or debit card, they run the card through a credit card terminal by either swiping the card (for traditional magnetic stripe cards) or dipping it into the chip reader (for EMV payments). For NFC (near-field communication) contactless payments, like Apple Pay and Samsung Pay, the customer may tap or wave the card or wearable over the credit card terminal, allowing the reader to communicate with the customer’s payment method.
The credit card machine (or terminal) then uses a phone line or an internet connection to complete the process of authenticating, submitting, and completing the card payment. Regardless of the type of card used, the process is similar.
First, after the customer swipes, inserts, or taps the credit card, the credit card machine communicates to the card-issuing bank for authorization through your merchant account. A merchant account allows you—the small business owner—to accept credit cards, debit cards, and other forms of electronic payments. A merchant account is similar to a standard checking account. When you use a merchant account, funds from the customer’s credit or debit card are transferred into your merchant account once they’re processed.
Once funds are confirmed as being available (and no security alert pops up) the merchant receives an authorization code and can complete the sale. The funds from the customer’s account are then transferred to your merchant account.
Types of credit card machines.
Technology now allows us to shop from anywhere, at any time. We can make purchases from our smartphones or computers. We can select one-click purchasing on websites. We can even tell Alexa to order dog food or paper towels from Amazon.
As the ways we shop have become more varied, the need for different types of credit card machines - and for more advanced methods of payment security - has increased. Let’s look at some of the common types of credit card machines available today.
Traditional/in-store.
The type of credit card terminal you’re probably most familiar with is the conventional, countertop credit card machine, typically found in brick-and-mortar stores. These machines allow customers to swipe, insert, dip, or tap their credit or debit card when they make a purchase.
Often, these countertop machines include a PIN pad, requiring the customer to enter his or her personalized identification number as an additional security method.
Mobile solutions.
Mobile credit card devices can offer the same functions as a traditional, in-store terminal, while offering you added flexibility. For example, your smartphone or tablet can be turned into a mobile credit card reader, as long as you have a Wi-Fi connection. You can either key in the payment information or you can purchase a mini-reader that plugs into your phone or tablet.
Virtual terminal.
A virtual terminal can exist on your website (such as on your ecommerce page), be accessed through a smartphone app, or on your desktop computer or laptop. With a virtual terminal, either you or the customer can enter the payment information. For example, think about online shopping. When you, as the consumer, check out, you enter your payment information and your shipping information to complete your purchase.
Integrated POS.
Your point of sale system (POS) can also include a credit card terminal, along with a monitor, tablet, cash drawer, and receipt printer, among other features. Think of your POS as the hub of your business. Your POS system allows you to process transactions while also handling several back-office tasks, such as customer, employee, and inventory management. The right POS system should be able to generate real-time reports and analytics for you, giving you easy-to-understand insights into your business. The credit card machine serves as one cog (albeit a vital cog) in this wheel.
Are credit card machines safe?
Although online and mobile payments allow for more convenience and flexibility, with the rise of credit and debit card use, fraud and theft also increased. For example, in 2018, credit card fraud hovered around $6.4 billion. This figure included both identity theft and the skimming of credit card numbers.
The security of your customer’s financial information is paramount to the success of your business. For any merchant that accepts credit or debit card payments, the business must comply with the Payment Card Industry Data Security Standard (PCI DSS). The PCI DSS was created by the Payment Card Industry Security Standards Council (PCI SSC), which was launched in 2006 by the major credit card providers, including Mastercard, Visa, American Express, Discover, and JCB. When shopping for a credit card terminal and processor, make sure to ask about PCI compliance.
How to choose the right credit card machine for your business.
Offering a secure credit card processing system is critical to the success of your business. By teaming up with an experienced, reputable processing partner, you can be confident that you’re offering your customers convenient, flexible, and secure payments, boosting your reputation as well as your customers’ experience.
When searching for a credit card processing provider, be sure to ask the following questions:
- What types of payments do you accept?
- What equipment is needed? If, for example, you operate an online store, your setup may be different than that required in a brick-and-mortar business.
- Do you offer 24/7 customer service? What about training?
- Does the payment processing system integrate with your other technological platforms, such as inventory or bookkeeping software?
- Do you provide reports on our sales, giving us insight into our business?
- Do you offer additional services that will help our business grow?
At North American Bancard, we partner with merchants of all types and sizes, helping them grow their businesses. We can help guide you through the setup of your payment processing for your brick-and-mortar or online store. We have the technology you need to adapt to consumer behaviors by accepting payments in the modern world, providing you with seamless integration and low fees. We’ll help you tailor your payment processing system to your specific business, giving you peace of mind. To set up a consultation, contact us here or give us a call at 877.840.1952.
