Credit card readers are an integral part of most checkout counters. Unless you only accept cash and checks, most customers will look for a credit card reader to complete the transaction. That’s great news because it opens your doors to the majority of shoppers who prefer to use a debit or credit card, but it also means you have some hardware to figure out.

These days, not all credit card readers are created equal. To choose the hardware that’s best for your business, you need to understand the various types of payment options customers like to have and figure out what your customers prefer. Here’s a side-by-side comparison of the three most popular card payment types: Contactless, magstripe and chip. 

What Is a Chip Card Reader?

Some years back, chip card readers began showing up at payment terminals across the country and they’ve been a mainstay ever since. This was part of a campaign by banks and card issuers to get consumers to “dip” instead of swipe because using a chip is more secure. Inserting the card into the slot and leaving it there while the transaction processes lowers the risk of fraud.

With that said, although chip card readers are often the first thing shoppers look for, it’s not exactly convenient. The increased security came with a tradeoff: Chip transactions are slow to process! Customers sometimes have to wait 10 to 15 seconds before the transaction is approved, and that wait time adds up when you’re dealing with long lines or just trying to help get customers out the door. 

What Is a Magstripe Card Reader?

Magstripe card readers are the tried-and-true payment method, but they’re falling out of favor. While still used for gift cards and some credit/debit cards, most people these days choose to “dip” instead of swipe because swiping is considered less secure. What’s more, if your payment terminal has a chip reader, the card might force the shopper to “dip” if they try to swipe.

If you don’t plan to get a terminal with a chip reader, your customers can still use their chipped cards by swiping it like in the “old days.” However, with customers becoming accustomed to dipping and waiting, this may seem less secure to them. Ultimately, having a magstripe reader is still important because it’s still so prominently featured on credit/debit cards and gift cards, but you shouldn’t rely on it. 

What Is a Contactless Reader?

If the magstripe offers speed, but chips offer security, contactless is the best of both worlds. Contactless payments gained major recognition during the pandemic for hygiene purposes, but they’ve long been positioned to take over the payments industry thanks to their speed, ease and security. If you’re unfamiliar with contactless payments, they’re also called “touch-to-pay” or “NFC” transactions.

NFC stands for Near Field Communication, and it’s a way for two devices, like the enabled card and terminal, to securely share information. With an NFC card reader, your customers simply have to pull out their eligible card or smartphone and hold it near the reader. Within mere seconds, the transaction will be approved, their receipt will be printed and they’ll be ready to head out the door.

Contactless is truly a touch-less experience because the customer won’t have to sign or enter their PIN. That’s especially great if your brand is focused on hygiene or if you know your customers are extra conscious of what they touch, like at a spa. So, do you have to accept contactless payments? Not so fast.

Choosing The Right Payment Types

Ultimately, you don’t have to choose just one type of credit card reader. You’ll probably end up investing in hardware that offers all three. After all, the magstripe has yet to fall out of favor and it’s handy for gift cards. Meanwhile, the chip reader is essential for the majority of card users who are willing to wait for security. Lastly, contactless payments gain more market share every year and failing to accept them can leave your business behind.

Upgrading to accept chipped cards is important, but upgrading to accept contactless payments isn’t yet a necessity. So, if you happen to be investing in new hardware, it’s worth getting a terminal that can accept all three of these payment types. If you choose a reliable provider like NMA that cares about your customer’s experience, you won’t have a hard time offering all three of these payment types thanks to our selection of affordable, modern hardware. 

About National Merchants Association (NMA)

National Merchants Association (NMA) is a merchant advocacy group dedicated to reducing or eliminating the unnecessary fees associated with accepting credit card payments. Since 2004, NMA’s payment processing solutions have been delivering tailored solutions, best-in-class customer service and high-quality service offerings for businesses across multiple industries. Whether it’s high-risk or low-risk, brick-and-mortar or eCommerce, NMA will create the best processing experience for your company.

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