How Does a Portable Credit Card Reader Work?

Credit card readers allow you take payment information over the phone.
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If you run a small or medium-sized business and can't take credit cards, it's likely you're losing out on a lot of trade. Services such as PayPal's Here, Verizon's Intuit and Square allow small and medium-sized business owners to take credit card payments through a smartphone or tablet computer. They're quick and easy to sign up for and simple to use but will take a fee out of the transactions you process.

Set Up

All mobile credit card processing services require you to sign into your merchant account before accepting a payment. This is typically as simple as entering your email address and a password. You'll then need to tap in the amount you want to charge your customer.

Transaction Details

You can then swipe your customer's card in the reader that attaches to your device. This will read your customer's payment information from the magnetic strip on the back of her card. You can enter your customer's card details manually if she's not present. Once this is done, you can send your transaction for processing.


Your processing service will then transmit your payment request to your customer's bank via an encrypted connection through a wireless or 4G network. If the funds are available, the amount specified will be electronically transferred to the merchant account you hold with your processing service. Most services allow you to send a digital receipt to your customer by email or text message once a payment has been processed.


Some payment processing services charge a percentage of the transactions you make while others use a combination of membership fees and payment charges. The latter might be a better option for you if you're going to process a high number of transactions. Services that charge a membership fee typically take a lower percentage of your transactions. Fees are taken directly out of your merchant account once a transaction has been processed.

Sign Up

You can sign up for a merchant account with a payment processing service online. You'll typically need to enter your personal or company details and verify your identity during the sign up process, much the same way as you would for a standard online payment account. Most services will send you a free card reader compatible with the latest Android, iOS and Windows devices. Check with your chosen payment processing service to find out if you have the right hardware. You'll need to download an app to your device to get started.

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