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What is a Card Reader?


What is a Card Reader?

Card readers are an electronic device used to accept credit and debit card payments from customers in a store. They are also often referred to as point of sale terminals, card machines, PDQ machines and chip and pin machines. Card readers can be wireless or attached to your till or computer. 

Paying by card is becoming an increasingly popular way to make purchases in stores, and offering more ways for your customers to pay can be of benefit your business. 

How card readers work

All credit and debit cards contain a magnetic stripe and an electronic chip that are used by card readers to make purchases. The stripe and the chip contain all of the customer’s card information including their name, card number, expiration date and security code. Card readers work by processing the information held within the stripe or chip to complete a sale.

Magnetic stripes are read by swiping the card down through the card reader. To complete this type of card transaction a customer must then sign the receipt printed by the card reader, which will then need to be compared to the signature on the back of the card. This method of paying is becoming less common as faster card payment methods such as chip and PIN and contactless are being developed. 

Chip and PIN card payments involve inserting the card into a card reader. The customer will then input their unique 4-digit PIN code to complete their purchase. This is one of the most common methods of paying by card. The card reader sends encrypted payment information to the merchant account where the payment is then approved and processed. This is a faster and more secure way to use a card reader than the magnetic stripe. 

The newest way to pay using a card reader is via contactless payments. Contactless payments allow shoppers to make payments up to £45 or 50EUR without having to enter their PIN, making the payment process even faster. Contactless payments use near field communication (NFC) and radio frequency identification (RFID) to register the customer’s card information. This same technology is at play when customers choose to use mobile payments such as Apple Pay or Google Pay.

When to use a card reader

Card readers can be used for any in-person transaction that involves the customer paying with their credit or debit card. The three main types of card readers are stand alone or countertop card machines, mobile or portable terminals and smart card readers or they can be fully integrated into the till or point-of-sale machine.

Stand alone terminals are often used by businesses such as clothing stores, supermarkets or post offices. They operate independently of your cash register but remain fixed in place at the till, so that the customer has to come to the card reader when making a purchase. These card readers are also known for being reliable and cheap to operate, making them ideal for smaller businesses. 

Mobile terminals are wireless card readers or payment dongles that can be attached to a smartphone or tablet to allow it to operate as a traditional card reader. Mobile card readers are popular in the hospitality industry, particularly for restaurants, cafes and kiosk vendors. These card readers operate using Wifi and offer a portable solution so you can bring the payment method to your customer, reducing the need for queues. 

Smart terminals are a new addition to card readers. They present merchants with the ability to track their stock, create reports on business transactions and manage customer loyalty programmes. These card readers are ideal for taxi drivers, courier services or any business looking to enhance their customer experience or add an element of  automation to their business performance analysis. 

Why use a Card Reader?

Using card readers to accept payments offers a range of benefits for both businesses and customers, including:

  • A safe a secure way to accept payments

​Payment via card readers are encrypted to protect customer data from fraud. Additionally, with the option to pay by card you may have less cash on your premises which can reduce the risk of theft or fraud which could impact your business’ profit margins.

  • Encourages higher value transactions

Customers are able to spend more in each transaction with the option to pay using a credit or debit card as they do not have to limit their purchase value to the amount of cash they have on them at that moment. This is also the case when shoppers use a digital wallet such as Apple Pay. Unlike contactless card payments, digital wallets have no limit as the shopper usually has to authenticate themselves biometrically.

  • Faster way to pay

Paying by card, particularly using contactless payment, is much faster than handling cash transactions. Card payments can allow you to process more transactions and keep queues to a minimum.

  • Flexibility 

Offering customers multiple ways to pay gives them flexibility over their payment and allows them to pay in their preferred way. This can improve trust in your brand, encouraging customer loyalty and increased sales in the future. 


Investing in a card reader for your business will help to keep pace with emerging payment methods and can help to improve your relationship with your customers and sales revenue. 

At Opayo we offer a range of card readers designed to suit different types of businesses. Explore our range of face to face payment solutions and discover fast and secure payment options that suit your business. 

Contact our UK based support team today to discuss how Opayo could support your business with card reader payments.