5 types of card readers and the payment methods they accept

With the vast proliferation of different types 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 various 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 you learn 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 can choose from. Some of these can print receipts, offer online payment services such as Payment Requests or payments via QR code, provide refund and tipping options, and have 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)

The first type of card reader we focus on is the mobile card reader. These ceaders don’t limit a merchant to one location, but ratherenable the merchant to take payments on the go. They can either be keypad readers or touchscreen readers. To process payments, these physical readers are connected to the Internet via a SIM or DATA card or through Wi-Fi, and process payments using GPRS technology.

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

Portable card readers

Portable card readers are similar to mobile card readers. They are mobile and can be used on the move. Also known as keypad readers or touchscreen readers, can be taken 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 essential 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 or  tabletop

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

This type of card reader isn’t mobile, and instead of a merchant going to the customer, in this scenario, the customer needs to approach the card reader in order to make the payment. These types of devices are most commonly found in the retail industry, which receives a lot of foot traffic in high-traffic areas and businesses’ different entry points. 

SoftPOS or Tap-to-Pay 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 SoftPOS solution, also known as tap-to-pay, 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

These card readers can accept multiple payment methods. Except for the virtual terminal and softPOS types, they can accept magnetic stripe, contactless, and Chip-and-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 card reader is quickly becoming outdated. The use of magnetic stripe card readers required customers to swipe their card’s magnetic strip or magnetic stripe 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 of performing a card swipe was considered a complicated process and was more prone to fraudulent use. This is because of the ease with which signatures could be forged. That’s why Chip&PIN payments were introduced later.

Chip&PIN

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

This method and contactless payments discussed below are considered safer than magnetic stripe payments.

Contactless payments

You can make contactless payments by tapping the card on these proximity readers or hovering it above the payment terminal for a few seconds. This hands-free access enables the “contactless” RFID technology to read the data stored in the card.

The transaction will then be sent 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, some payments 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 credentials in a virtual wallet by first doing identity verification. This ensures your card details’ safety through security measures such as “tokenisation“.

These biometric readers often also require some form of identity verification and biometric access control, such as a fingerprint or a PIN to be entered by the customer. This enables the process of authenticating the payment to proceed.

They are also considered two-factor authentication readers because of the two-step process or two-factor authentication involved in authorising a payment.

They are excellent choices for both in-store and online payments and offer enhanced security.

Pros and cons of different types of card readers

Every card reader comes with its own unique set of rich features and functionalities. Choosing the right one for your business will depend entirely on your needs. Consider some of the following pros and cons of different card readers so that you can make an informed decision. 

Card reader	Pros	Cons
Mobile card readers	Accept multiple types of card paymentsAccept payments from any location	Require an Internet connection
Portable card readers	Accept a wide variety of card payments.	Potential glitches could slow down your payment acceptance processRequires an Internet connection
Virtual card readers	SecurityCustomer convenienceNot limited to a physical location	An Internet connection is required
Countertop/tabletop	Accept a broad range of card and digital wallet payments.	The card reader is fixed to a physical location and is not mobile.
SoftPOS apps	Great for professionals on-the-goNo additional hardware is required, you only need your smartphone	Requires an Internet connection

Different card readers are tailored to meet specific business needs. That’s why exploring their functionalities, features, and pros and cons is always a wise idea. This way, you can make the best choice for your business, whether it’s at a physical store or a business on-the-go. Having explored some of their perks and potential downsides, you now know which one will meet your needs best.

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, such as countertop, mobile, portable, softPOS, or virtual terminal readers.