Everything you need to know about credit card readers for small businesses

The business world needs a secure way to do credit and debit card transactions in favour of a society that likes to conduct more purchases over cards than cash. Usually, vendors rely on a card machine for business to satisfy clients choosing credit or debit cards as a mode of payment. But only a few people have a better understanding of the world of card processing machines. It is crucial to study and have a deeper understanding of card readers if you run or plan to start a business regardless small or big. To achieve success in your business, you must choose a suitable card reader for your business and your target clients. A card reader is a device that reads the card information and sends it to card holder’s bank to request verification and coordinate the transaction.

In the finance industry, the term “card reader” refers to the technology that detects a credit card’s account number, information about the cardholder, and authorisation code. A magnetic strip on a card or a microchip embedded in a chip-enabled card contains this information. Traditionally the vendor made and stored physical copies of card information, but today’s card readers can scan and process it electronically in a matter of seconds.

There are different kinds of card readers available in the market today which are:

Magstripe

Magstripe card readers work by scanning and collecting information from the magnetic strip on the credit or debit cards. In favour of EMV chip cards or contactless payments, credit card companies are phasing out cards with magnetic strips. Scammers can easily duplicate a magstripe card if they have the card number. But cards using the latest technologies like NFC and EMV CHIP are not that easily scammed.

Chip or EMV readers

Your customers will be able to use their chip cards securely with these readers.

Why do we need EMV? The EMV standard was developed and is managed by major credit card companies. Secure payments can be made in any environment, whether it’s face-to-face or over the Internet, thanks to EMV technology. Instead of using a swipe, EMV uses an insertion or dip approach. Compared to traditional magstripe cards, these cards are more secure.

Contactless card readers

Contactless card readers are the newest addition to the card readers family and became popular during the COVID pandemic. This type of card and readers allow customers to make contactless payments by waving their cards near the card reader.

How do credit card readers work?

Magnetic strips, microchips, or both contain the cardholder’s personal information on today’s payment cards. Among this information, there is the full name of the cardholder, along with their account number, card expiration date, and code of validation. To obtain authorisation for the transaction, modern credit card readers decode this information from the card and share it with other parties in the payment network.

When a card reader captures information about a credit card, it is sent to the credit card issuing bank. Customers’ credit or cash availability should be determined by the issuing bank. Additionally, the issuer will investigate whether the card has been rendered ineligible for future transactions, such as due to fraud associations. To complete the transaction, funds will be transferred after the bank verifies the cardholder’s details.

What are the benefits of using a credit card reader?

Compared to other payment methods, card machines have an upper hand due to the benefits they provide. Humans will choose a path that is easier for them to do a task. We are discussing a few benefits a business can achieve by using a card machine for business.

Bigger market

As mentioned above, more and more people today use credit cards to make purchases. Many people who own credit cards use them only, when necessary, but many prefer not to carry cash. The main reason for this is that credit cards provide greater security than cash. Cashless purchases are viewed as luxurious by some. Statistics have shown that the number of EMV and chip cards has increased significantly since the liability shift a few years ago. As per 2019 statistics, at least 67 percent of the UK population owns at least one credit card. The credit card reader is a huge asset in your business because if you don’t accept credit cards, you are highly likely to lose a huge number of customers.

Mobile card machine and portable card machine helping vendors to take their POS terminals directly to their customers. Now vendors can conduct transactions at any place at any time with the help of such card machines.

Security

There used to be a lot more card fraud with debit, prepaid, and credit cards in the past. Transactions were conducted using magnetic stripe cards at that time. However, card transactions became highly secure when EMV chips were installed on cards.

To ensure secure credit card transactions, a chipped reader can be used. As a result, this could also attract more customers for you, particularly those who are aware of the safety of chip reader transactions and the encryption that protects customer data. For more accurate identification and validation of payments, cryptographic processing is used in the best card readers.

Economical in the long run

Today’s credit card machines come with a motto to help businesses in many ways than just processing cards. They will simplify your money flow, will provide more security to the business as well as its customers, also will help with other tasks. Today’s card machines are designed in a way that they will act as a silent partner in business. Since card machines are more efficient and precise than their human counterparts, they can reduce the human resources and effort involved in running a business. Also, a merchant can become eligible for funds like merchant cash advances if they use credit card machines.

Reputation

It is the peace of mind that comes with knowing that your credit card information is protected, along with your money. Having a card machine for business or several for your business, along with the improved transaction security discussed above, can have a great impact on your reputation. It gives your customers the feeling that you’re a dependable, established business, especially if you’re a small company.

Record keeping

Without proper record keeping and bookkeeping, business failure is inevitable within a few months. Credit card readers provide the benefit of enabling transactions to be tracked and retrieved whenever needed because they are recorded so you can always track them. In addition to getting regular reports and statements of your transactions, you’ll also be able to manage your books more easily with a merchant account.