A Guide to Smartphone Card Readers

Processing credit card payments used to be a major hurdle for small businesses. In order to accept credit cards, a business owner would have to set up a merchant account at their financial institution, purchase an expensive card reader, set up a subscription and not only pay subscription fees, but more fees for every transaction they made. Going through these steps can be expensive and time-consuming, as business owners have to pass a credit check and gain their bank’s trust.

As a result, many small business owners have found themselves having to turn away customers, just because those customers aren’t carrying cash. Now, however, a variety of smartphone apps have made taking credit card payments faster, easier, and more affordable.

Modern Day Card Payment Systems

Services like Square, PayPal, and iZettle offer quick and easy-to-use processing plans that can process credit cards right from the user’s smartphone, without the need for any additional equipment. While mobile card readers charge more per swipe than traditional card processing systems, they also eliminate the ongoing fees and hardware costs of those systems — which lowers the bar for entry for small business owners, and makes more sense financially for businesses that are mobile.

Most of these apps operate on a simple principle. While traditional credit card readers required being tied to a physical location (like a storefront), these free applications can process cards anywhere there is Internet service. Some apps require the use of a separate physical card reader that attaches to the smartphone itself, while others allow users to enter credit card information manually, directly through the smartphone, either through entering the numbers or scanning the card with the phone’s built-in camera. While many card reader applications are available for ioS and Android, only a few support platforms like Blackberry.

Phone card readers generally eliminate the need for a merchant account by allowing users to connect the mobile app directly to their bank account. Payments processed through the card readers are sent directly to the account. In most cases, the user is charged a per-swipe fee, usually around 2.7%, for each transaction, without any further subscription fees.

Security

While smart phone readers have undoubtedly been a boon for small business owners, there are some concerns regarding secure credit card payment systems. The sight of seeing one’s credit card swiped on a personal phone can raise questions of how safe the process is. However, mobile card reader apps are held to a high standard of encryption, and unlike some brick-and-mortar card handling, the card never leaves the owner’s sight. Transactions are quick and simple, and while there is a possibility that unencrypted card data could be intercepted by a third party, these risks are generally considered no greater than those faced by RFID-enabled “swipe-and-go” cards.

However, when using smart card readers, a user should employ some basic security measures, such as keeping their phone locked when not in use, ensuring that their smartphone is not “rooted” or “jailbroken,” using only approved applications for taking credit card transactions, keeping their operating system and firmware up to date, and preferably using a reader app that does not store card data.

Compare

Small business owners looking to expand their customer base by accepting credit card payments have a wide variety of services to choose from. The first and most prominent card reader service provider is Square, which is not yet available in the UK — however, many alternative services such as iZettle, Adelante, PayPal, Intuit, card.io and GoPayments have been providing international alternatives to services like Square. When comparing services, business owners should look into the features and strengths of each application — the rate per transaction, whether the application can provide receipts, the ability to charge credit cards via a Web interface as well as through the smart phone, and so on.

Smartphone Card Readers

iZettle

· Only available in Sweden, Denmark, Finland, Norway, Germany and the UK

· Fees from 1.50% depending on your monthly sales

· Card reader £82.50 plus VAT

Square

· 2.75% fee per transaction

· Next day deposits

· Free card reader

• Available for Apple and Android
• Limited availability to US and Canada

 

PayPal Here

• Available for Apple and Android

· Newly launched in the UK and US and continuing to launch internationally

· 2.7% standard fee per transaction

· Card reader is free

Intuit Smartphone Card Reader

· Available for Apple and Android

· Fees from 1.57% per transaction

· Instant payment

· Customized branding

· Free app and card reader

 

Swift

• Available for Apple and Android
• Negotiable fees depending on the nature of your business and where you are based

 

About the author: Hannah works with vouchercloud. They are a leading voucher code company who offer their customers top deals through their website. Hannah works with a variety of brands and businesses. She has seen a change in the way businesses function as technology advances. Small businesses are now able to grow and make the most of potential custom thanks to smart phone card readers; they also add a sense of professionalism. As more companies release their own card reader devices, fees and costs are becoming competitive which is good news for small businesses setting up.