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- Card readers process payments in three steps: authorization (checking funds), authentication (verifying legitimacy), and settlement (transferring money).
- Modern readers accept secure chip (EMV) and contactless (NFC) payments, which are faster and safer than outdated magstripe swipes.
- When choosing a reader, compare hardware costs, transaction fees (usually 2.6%-3.5% per sale), and compatibility with your devices.
- To start, connect the reader to your smartphone or tablet via Bluetooth and download the provider's payment app.
- Using a card reader enhances security with encryption, speeds up checkout for customers, and simplifies bookkeeping with automatic transaction logging.
- Some modern apps now allow businesses to accept contactless payments directly on a smartphone, eliminating the need for a separate reader.
Knowing how to use a credit card reader is essential for any small business. It ensures you can get paid quickly and meet modern customer expectations for smooth, secure transactions.
With card payments making up 66% of all consumer purchases, accepting them is crucial for growth. Our step-by-step guide makes setup easy so you can start processing payments right away.
How do credit card readers work?
Card readers make secure payment processing simple — when a customer pays, the device quickly sends their information through a three-step journey to get you paid.
The 3-step payment processing journey
- During authorization, the reader sends transaction details to the customer’s bank to check for sufficient funds. The bank sends back an approval or denial message in seconds.
- In the authentication step, the system verifies if the payment is legitimate. Technologies like chip cards generate a one-time code for each sale, making the transaction highly secure.
- Settlement is the final step, where approved funds are officially transferred from the customer's account and deposited into your business account.
Understanding the different types of card readers
Your card reader will accept payments using three main technologies.
- Magstripe readers use the traditional swipe method. While once standard, this technology is less secure than modern options and is quickly being phased out.
- Chip (EMV) readers require customers to "dip" or insert their card. The embedded chip creates a unique transaction code, which protects against fraud.
- Contactless (NFC) technology enables tap-to-pay transactions for both cards and mobile wallets like Apple Pay or Google Pay, offering the fastest and most secure way to pay.
How to get a credit card reader for your business?
Choosing the right device is a key step. You need a reader that fits your budget and works seamlessly with the technology you already own.
Comparing costs and processing fees
To find the most affordable option, look at the complete cost, not just the hardware price.
- The hardware cost for many readers is under $60 and some providers offer a free or discounted device when you sign up.
- You will be charged transaction fees for each payment. These fees typically range from 2.6% to 3.5% plus a small fixed amount.
- Some processors have monthly fees, but many offer plans without them, which is ideal if your sales volume varies.
Ensuring hardware and software compatibility
When you're deciding how to get a credit card machine for small business, make sure it's compatible with your current setup.
- For the operating system, confirm the reader’s mobile app works with your smartphone or tablet, whether iOS or Android.
- Check the connectivity, as most modern readers connect to your device using a reliable Bluetooth connection.
- You will need to download the provider’s software, typically a free payment app, to start accepting payments.
Setting up and operating your card reader
Getting started is simple. Following these steps will help you set up your device and begin processing payments securely in just a few minutes.
Step 1: Connect and set up your device
First, you need to connect your reader to your smartphone or tablet.
- Charge your card reader fully using the included USB cable before its first use.
- Download your payment provider’s mobile app from the Apple App Store or Google Play Store.
- Open the app and follow the on-screen instructions to pair your reader with your device via Bluetooth.
Step 2: Accept chip and swipe payments
Once you know how to use a credit card machine for your business, taking payments is straightforward.
- Open your payment app and enter the total transaction amount.
- For chip cards, ask your customer to insert their card into the slot at the bottom of the reader and leave it in until the transaction is complete.
- For older cards, swipe the magnetic stripe through the reader in a single, smooth motion.
- Follow the prompts for a PIN or signature, then send a digital receipt via email or text.
Step 3: Take contactless and mobile wallet payments
Contactless payments are the fastest way to check out.
- After entering the amount, look for the contactless symbol on the reader’s screen.
- Ask your customer to hold their card or smartphone over the reader for a second or two.
- Wait for a beep or a checkmark on the screen to confirm the payment was successful.
How to clean a credit card reader
Keeping your device clean is important for performance and security. Here's how to clean a credit card reader safely:
- Wipe the exterior of the reader with a soft, dry microfiber cloth.
- For the chip reader slot, use a dedicated card reader cleaning card to remove dust and debris.
- Never spray cleaning solutions directly onto the device or use harsh chemicals, as they can cause permanent damage.
Main benefits of using a card reader
Accepting card payments does more than just increase your sales, as it enhances security, improves customer satisfaction and streamlines your operations.
1. Enhance your business security and prevent fraud
Modern card readers are designed with security as a top priority: they use chip technology (EMV) and data encryption to protect sensitive card information from the moment it is captured. This significantly reduces your risk of chargebacks from fraudulent transactions and helps you meet PCI compliance standards, building trust with your customers.
2. Offer convenience and faster checkout for customers
Accepting cards, especially contactless payments, makes checkout much faster. This is critical, as studies show 31% of consumers have abandoned a purchase due to a complicated checkout process. A quick and easy payment experience improves customer satisfaction and encourages repeat business, helping you avoid lost sales.
3. Simplify transaction tracking and bookkeeping
Using a card reader eliminates the need for manual sales tracking. Your payment provider’s app automatically records every transaction, creating a digital paper trail. This makes it easy to monitor your daily sales, track revenue trends over time, and simplify your bookkeeping and tax preparation process.
Turn your phone into your new card reader
Using a card reader is key to getting paid quickly and securely. Modern solutions now let you skip the extra hardware and accept payments directly with your smartphone, simplifying the entire process from setup to sale.
Imagine accepting contactless cards and mobile wallets without buying or connecting a separate device — JIM offers this with a simple app, combining convenience with powerful features:
- Flat 1.99% rate per transaction.
- No monthly fees or hidden costs.
- Funds available with instant settlement.
Ready for a simpler way to get paid? Download the JIM app to start accepting payments today.
