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What is a card reader – definition of card payment machines

There are many names to describe card readers these days. Some call them POS terminals, card machines, payment terminals, and more. Ultimately, however, we’re talking about the technology that helps a merchant accept debit and credit cards, prepaid, and gift cards in the payments acceptance process.

With the rise of cashless payments on the continent, it’s clear that card readers play a crucial role in helping merchants accept payments. If you’re new to the world of seamless payments and you’d like to find out what is a card reader, keep reading below! 

A brief definition of a card reader

A card reader is essentially a piece of electronic technology designed to decode the information in the card’s magstripe or chip. The electronic data input device that is the card reader can be handheld, wireless, or connected by wire to a PC or sales terminal and has several common features across the variety of devices that are available on the market.

Traditionally, these devices contain a screen, keypad, or touchpad for smart devices, and important features that enable the card reader to engage with the customer’s card. These features may include the ability to enable the card to be physically inserted in the card reader or the chip to be read, the ability to enable the card’s magnetic stripe to be swiped, a pin pad or a touchpad, as well as features which enable the card reader to process contactless transactions.

At this point, it’s essential to look at some characteristics of debit and credit cards. Physically, they are small, thin pieces of plastic with cardholder details embossed on the front of the card. These details include the PAN number of the card, the cardholder’s name, and the expiry date.

Another feature of the front of the card is the chip, which is a piece of technology which, when inserted in a card reader, enables the latter to transmit information to several actors – issuing bank, merchant’s bank or financial services provider, in order for a payment transaction to be processed and for the sales process to be completed.

The back of the card contains a magnetic stripe, or magstripe, which very much like the chip on the front, contains the cardholder’s data and is used to communicate to the various actors in the payment process. The back of a credit card also contains a CVV number, added for extra layers of security and to reduce incidents of fraud. It is the chip and the magnetic stripe, which are the key features of a card that relate to card machines. This is because the chip and the magnetic stripe contain all the information on the card and more. 

Additional features

The different types of card readers offer various additional features which may be beneficial for your business. Here’s a brief list of some of those:

  • Highly responsive Multi-touch touchscreen displays
  • Possibility to connect to networks via Wi-Fi connection
  • Thermal receipt printers with options to customize receipts for specific brands
  • Digital receipts through SMS and E-mails for more sustainable business workflow
  • Payment requests directly through the card reader
  • Ability to issue refunds without the need to use additional hardware and software
  • Tipping – perfect for taxi, bar, and restaurant businesses

When should you use a card reader?

You can use payment terminals to process the customer’s card for payment, after which the devices “read” the information on the card, transmit it to the relevant parties in the workflow and finally complete the transaction with either an approved, or a declined payment.

The three most common ways that card readers can “read” the cardholder’s information are through swiping the magnetic strip, inserting the chip into the chip reader, or contactless through a hover near a designated area. 

What are the benefits of using a card reader?

Apart from the obvious benefits of using card readers for your business, namely that they offer a faster and more efficient way for customers to pay you and reducing queue times, other benefits include:

  • They offer customers a wider choice for making payments – via cards, digital wallets, contactless, Chip&PIN, magstripe, and more
  • They are more secure than keeping cash on site
  • They enable the collection of sales data, which can help with reporting and analytics. 


Card readers in today’s day and age are an invaluable asset to a small and medium business. In fact, the payments landscape in Europe is changing quickly with Statista estimating that as of late December 2020, there were over 15.5 million such terminals processing payments across Europe.

These electronic pieces of technology help merchants accept a variety of card payments and mobile wallets, eliminating or reducing queues, offering customers a more secure way to pay, and better facilitating the process of payment acceptance. If you’re looking for an affordable card machine, it’s always good to get informed about the options you have available to you before you make your final decision. 

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