How does a credit card machine work

Published: 06/ 11/ 2019

Spending on plastic is at an all-time high and in 2018 card payments overtook cash in the UK for the first time, so there’s no doubt having the facility to accept card payments is a no-brainer for businesses.

But, whether you’re considering taking the plunge or already accept payment by card, you might be wondering how it all works, and that’s where we’re here to help. Let’s start by stripping it right back to basics.

What is a credit card machine?

Sometimes called a Chip & PIN or card reader, a credit card machine is exactly what it says on the tin. It’s a machine that allows you to take payment via credit card.

There are three types of card machine; portable, mobile and countertop. Let’s take a quick look at each:

Portable: with a portable credit card machine, you can take payments from customers without being stuck in one place. Whether that’s on the shop floor or at a table, Bluetooth technology allows you to take your machine to the consumer.

Mobile: perfect for anyone who travels to see their customers, mobile machines can be used anywhere with a 3G connection, allowing you to take card payments on the go.

Countertop: as the name suggests they’re used to take payments from a fixed point, whether that’s a till, desk or reception. All you have to do is plug it into your broadband or phone line and you’re ready to accept card payments.

And, so long as you work with the right provider, any of the above types of card machine are capable of accepting contactless card payments.

How they work: a six-step guide

So we know what they are and why you use them, but how exactly does it work?

1. You enter the payment amount

The process starts with you, the merchant, entering the transaction amount into your card machine.

2. The customer inserts or presents their card

If your customer’s happy with the amount, they’ll do one of two things. For contactless payments, they’ll simply tap their card on your machine and for chip & PIN, they’ll enter their card into the machine and put their digits in.

3. The chip interacts with the machine

Now comes the clever bit, the chip on your customer’s card communicates with your machine, which in turn sends encrypted transaction data to your merchant account.

4. An authorisation request is sent

Once the data’s received, the acquiring bank will send an authorisation request to the credit card provider who’ll ask for authorisation from the customer’s bank.

5. Verification checks complete

The card provider will verify the card details are correct and pass the authorisation request to the customer’s bank, who’ll then check and confirm there are sufficient funds or credit remaining on the account.

6. The payment is sent

If everything runs smoothly up to this point and the payment’s been authorised, your card machine will let you know it’s been successful and you can send your customers on their way. The money will be in your business bank account in three to five days.

Does it work differently for contactless?

The only difference for contactless is that your customer won’t enter their PIN. Once they’ve tapped their credit card on your machine though, the chip will interact and the rest is exactly the same.

What about debit cards?

There’s no difference between debit and credit card transactions, the process is identical.

Why would a transaction be unsuccessful?

Your card machine might tell you a transaction’s been unsuccessful for a couple of reasons. 

Firstly, it could be that something’s gone wrong during one of these processes. If your customer is sure the problem’s not on their part, one of the systems involved might have failed.

Secondly, it might be down to the customer having insufficient funds in their account or not enough credit left to cover the cost of the transaction. In this case, the customer’s bank will not authorise the payment request. 

For more information on our mobile, countertop or portable card machines, or to get the ball rolling and start accepting card payments, speak to our team of experts today on 0808 274 2017.

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