These readers allow your customers to securely use their EMV chip cards. (A scammer who has a card number can easily duplicate that card.) Chip cards and contactless payments can’t be easily duplicated. Magnetic stripe cards are being replaced because they’re more prone to credit card fraud. Shopify's Tap & Chip Card Reader that accepts chip and contactless payments. Credit card companies are phasing out cards that only have a magnetic stripe in favor of EMV chip cards or contactless payments. MagstripeĪ magstripe reader reads the magnetic stripe on credit cards. Here we’ll look at the different types of credit card readers and how they work. This process may take a few days, depending on your bank and the payment gateway you choose. Once the funds have fully processed they can be deposited in the merchant’s account. Often, multiple payments are sent at the same time, a process known as batching. The credit card company moves funds to the merchant’s bank account. If the customer has enough money in their account, the bank puts a hold on those funds and marks the transaction as pending. The customer’s bank verifies that the customer has enough money to complete the transaction. The payment gateway securely passes the encrypted data between the merchant’s bank and the customer’s bank.
When the customer swipes, dips, or scans their payment method, the data from their card goes to the payment gateway. Here’s what happens behind the scenes once a customer wants to make a purchase from your business and scans or dips their credit card, smartphone, or contactless card to pay. Let’s look at the journey the data takes through a card processor, from the customer’s card to final purchase.
Simply put, credit card readers take your customer’s payment information, securely communicate the transaction data, and flow the data from the card to the cardholder's bank and back to you to finish the sale. If the card reader detects available funds, the transaction is approved.
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