5 types of card readers and the payment methods they accept

With the vast proliferation of card readers on the market and advancements in technology, it may come as no surprise that the world of card readers has grown. There are a variety of different card readers on the market, each especially designed and built to cater to a wide range of businesses’ payment acceptance needs.

In this post, we’ll consider some of the most prominent types of card readers and discuss an ideal choice for your business based on industry type.  It will also help to know how to get the right card machine.

5 different types of card readers

Below are some of the most common types of card readers that a merchant might be able to choose from, some of which can print receipts, offer online payment services such as Payment Requests or payments via QR code, provide refund & tipping options and multi-operator modes, making it easier for employees and business owners alike.

Payment terminals are suitable for a variety of business types, and although we cover some of the different types, this is not an exhaustive list:

Mobile card readers (also remote or wireless)

Mobile card readers don’t limit a merchant to one location, but rather, enable the merchant to take payments on the go. In order to process payments, they are connected to the Internet via a SIM/DATA card, or through Wi-Fi, and process payments using GPRS technology.

The industries which often make use of mobile card readers are taxi drivers, delivery couriers, and tradespeople. 

Portable card readers

Similar to mobile card readers because they are mobile and can be used on the move, you can take portable card readers directly to the customer instead of waiting for them to approach the countertop device.

Those devices need to be connected to the Internet, usually via DATA SIM or Wi-Fi, although other options are available. The difference between portable and mobile card payment machines is that mobile ones are usually designed to be used on the move.

Restaurants are typical examples of industries and businesses that use portable card machines.

Virtual card readers

Because global borders are shrinking and customers from across the globe can flock to your business – whether making a booking at your hotel and accommodation business or making a purchase from your e-commerce store – MO/TO payments, or “mail order, telephone order” payments are becoming an important part of the payments landscape.

As a result, virtual terminals were developed to help merchants accept payments via phone or via email, by receiving their customer’s card data and manually entering it on a secure payment gateway. You must have an active Internet connection for a virtual terminal to operate.   

Countertop / tabletop

The countertop card reader is a static/stationary device, which usually stays on the merchant’s countertop, hence the name.

This type of card reader isn’t mobile, which is discussed in more detail below, and instead of a merchant going to the customer, in this scenario, it is the customer who needs to approach the card reader in order to make the payment. These types of devices are most commonly found in the retail industry. 

SoftPOS apps

Finally, in the last category in our list are softPOS solutions. Essentially, these are apps that can turn your mobile phone into a payment terminal or card reader with no additional hardware required to read the cardholder’s information and to communicate this information to the relevant parties in the payment acceptance process.

This solution makes it easy for professionals on the go, couriers and delivery professionals, seasonal markets, food trucks, freelancers, and more. 

Payment methods these card readers can accept

Most of these payment methods, except the virtual terminal and softPOS types, can accept magnetic stripe, contactless and Chip&PIN payments. 

Here are some of the most common payment processing methods which card readers use:

Magnetic stripe

Of the three types mentioned above, the magnetic stripe payment method is quickly becoming outdated as it used to require customers to swipe their card on a card terminal followed by the printing of a receipt and a signature on the receipt to authenticate the purchase.

However, it was found that this method was more prone to fraudulent use because of the ease with which signatures could be forged and Chip&PIN payments were later introduced.

Chip&PIN

A payment with a Chip&PIN is what the name implies – the chip is inserted into the card reader which then requests the cardholder’s four-digit PIN in order for authentication and transaction approval to take place.

This method, together with contactless payments discussed below, is considered safer than magnetic stripe payments.  

Contactless payments

You can make contactless payments by tapping the card on a card reader or hovering it above the payment terminal for a few seconds to enable the “contactless” RFID technology to read the card data and send it to the relevant parties in the transaction approval process where the payment is authenticated automatically through data exchange with the card itself. 

Digital wallets

Finally, there are payments that can be made with digital wallets. Examples of these include Apple Pay and Google Pay.

An increasingly popular form of contactless payments, these digital wallets enable you to store your card details in a virtual wallet, ensuring your card details’ safety through a process of “tokenisation”. They are excellent choices for both in-store and online payments. 

Conclusion

All businesses want to stay competitive and operational, earning more and growing. Implementing a card reader at your business is one way of achieving this goal. In fact, a Mastercard study conducted in 2020 showed that almost 8 in every 10 customers used a contactless payment method during the Covid-19 pandemic as a healthier, more hygienic, and safer way to pay.

This gives businesses the impetus to accept payments using different types of card readers – whether countertop, mobile, portable, softPOS, or through a virtual terminal.