A mobile credit card reader is a plug-in or peripheral device that allows merchants to accept credit card payments on their phones. Read this guide to learn more about mobile point of sale options.
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The best credit card processing companies enable small businesses to accept credit card payments on their phones. However, there are a few different ways to accept credit cards using a phone, including mobile card readers, virtual terminals, QR codes, and payment links.
This guide walks you through how to accept credit card payments on your phone, including a breakdown of mobile card reader options and step-by-step instructions on how to get started.
Table of Contents
- Can I Accept Credit Cards With My Phone?
- How Do Mobile Credit Card Readers Work?
- How To Accept Credit Card Payments Using Your Phone
- Accepting Credit Card Payments On Phone: The Bottom Line
- FAQ: How To Accept Mobile Payments On Your Phone
Can I Accept Credit Cards With My Phone?
Yes, businesses can accept credit card payments with phones compatible with mobile credit card readers or payment processing apps. This payment acceptance method is referred to as a mobile POS.
The best mobile POS systems also accept credit card payments on mobile phones without a credit card reader through the use of payment links, QR codes, or virtual terminals.
How Do Mobile Credit Card Readers Work?
| Type Of Credit Card Reader | How It Works |
|---|---|
| Magstripe Readers | Reads code from a swiped card’s magnetic stripe; Least secure option |
| EMV Readers | Reads payment information from the square chip embedded in a card; Card inserted into the reader |
| NFC Readers | Payment data transmitted at close range; Contactless payments via smartphone or tap-enabled cards |
A mobile credit card reader is a plug-in or Bluetooth-enabled device that allows merchants to accept credit card payments on their phones.
The best credit card readers will incorporate two, or even all three transaction types: magstripe, EMV chip, and Near Field Communication (NFC) transactions.
Mobile credit card readers are usually provided by your existing merchant account provider or third-party processors such as Square or PayPal.
Here’s a look at the types of mobile credit card readers and how they work.
Credit Card Swipers
A credit card swiper accepts magnetic stripe (magstripe) payments — the type of payment credit cards were originally designed for. While they are convenient and possess a smaller physical profile compared to other types of readers, they are considered obsolete.
Of the three methods of accepting payments, magstripe payments are by far the least secure. What’s more, due to regulations enacted in 2015, if a merchant only has a magstripe reader and a customer uses a stolen or fraudulent card with both a magstripe and a chip, the merchant is responsible for the loss on the purchase.
To shift the liability back to the credit card companies, the merchant needs to have an EMV card reader.
EMV Card Readers
EMV card readers are colloquially known as chip card readers. With EMV technology, your payment information is stored digitally on a square chip embedded in your card.
As EMV is designed to be much more secure against fraud than magstripe technology, anybody doing business in the modern world will want to be able to accept EMV payments to help prevent chargebacks.
NFC Card Readers
NFC stands for Near Field Communication, and it refers to wireless payment technology that transmits payment information at close range. NFC payments are sometimes referred to as mobile wallet or digital wallet payments.
Customers use mobile wallet payment apps, such as Apple Pay, Google Pay, and Venmo, to transmit their payment information via either a smartphone app or an NFC-enabled credit card. Unlike magstripe technology, it’s highly secure.
However, contactless NFC technology is not yet as widely used as EMV and magstripe technology, so if you choose to accept NFC payments, you’ll want to be able to accept other types as well.
Thankfully, most mobile card readers that can accept contactless payments can also accept chip (EMV) and/or swiped (magstripe) payments.
How To Accept Credit Card Payments Using Your Phone
To accept credit card payments on your phone, you’ll need to choose which payment acceptance method you’ll be using, sign up with a processor, and go through an app onboarding process. Here’s how to accept payments on a mobile phone:
1. Determine Which Transaction Method You’ll Be Using
| Mobile Credit Card Payment Acceptance Method | How It Works |
|---|---|
| Mobile Credit Card Readers | A small device that can read swiped cards is plugged into the phone’s headphone jack or charging port. Compatibility varies. |
| QR Codes | Scannable 2D barcode generated. Customers are prompted to input their card details. Businesses can scan customer QR codes to access card details. |
| Payment Links | A payment link is generated for a specific transaction that prompts customers to input their card details. |
| Virtual Terminals | Backup to POS hardware that requires the manual entry of credit card details. Slow and relatively insecure. |
As there are multiple ways to accept credit card payments using a phone, you’ll need to determine which method will be best for your business.
When choosing between a credit card reader, QR codes, payment links, or a virtual terminal, you’ll need to consider security, speed, and compatibility.
Some apps offer several options for processing a credit card transaction, so you may not need to choose just one.
Virtual Terminals
A virtual terminal enables businesses to enter credit card information by hand. While this requires no additional hardware and manual entry, it’s slow and considered relatively insecure.
Such transactions are often charged a higher fee for this reason. You’ll probably use a virtual terminal mainly as a backup, or if you only occasionally process credit card transactions on your device.
Mobile Reader
A mobile reader is a piece of hardware that allows you to securely and quickly accept credit card transactions on your phone. They generally either plug into your device directly or through a Bluetooth connection.
For this reason, it’s essential to consider compatibility before purchasing a mobile reader. Consider Bluetooth ratings, whether your device has a headphone jack, OS requirements, and any charging port adapters that you may need (especially with Apple devices).
Additionally, your card reader will need to be synced to your device to accept the transaction. You also want to make sure you’re connected to the internet, although many apps can process in “offline mode” in a pinch.
Payment Link Or QR Code
You can bypass the need for a reader by using payment links or QR codes. These will process the payment as a card-not-present transaction, which is generally more costly.
However, they may be more convenient for some customers who wish to keep their card data private or want to pay online.
2. Open An Account With A Payment Processor
If you want to start processing payments with your mobile device, you’ll need an account with a payment processor. This can be a full, individualized merchant account or an account through a third-party processor.
When choosing a payment processor, you’ll need to ensure that their hardware and software are compatible with the mobile device you are planning on using to accept card payments.
Generally, credit card readers are only available for use by established businesses or nonprofits, so you’ll need to have relevant information (such as your business’s EIN) on hand if you’re signing up for the first time.
3. Open Your Mobile POS App On Your Device
Most mobile POS services utilize an app or web app to process transactions. Make sure it’s opened, and you’re logged in.
If you’re signing up with these services for the first time, you’ll need to create an account and go through the setup process.
Each app’s setup process will be a little different, but they should allow you some customization, such as tips, receipts, and customer loyalty program signups.
4. Secure Your Mobile Payment Acceptance Process
Logging in with your password is just one security measure you should take when accepting credit card payments with your phone.
Adding extra layers of security, such as biometric locks, alphanumeric passwords, one-time passcodes, hardware keys, and other multi-factor authentication options, is always a good idea.
Customers may also need to approve their transactions, so be sure to include options for collecting signatures or PIN entries.
5. Process The Transaction
- If You Have A Card Reader: Swipe, dip, or tap the customer’s presented card or device (if they’re using a digital wallet).
- If You Are Using A Virtual Terminal: Enter the customer’s credit card information into the corresponding fields in your app.
- If You Are Using A Payment Link Or QR Code: Send the payment link to your customer or present your app’s QR code to be scanned by the customer.
6. Advertise Your Card Acceptance
If your business operates in a field that is typically limited to cash payments, accepting card payments via phone is a great way to beat out your competition just by offering customers a more convenient way to pay.
For example, selling at a farmer’s market and advertising that you accept card payments can draw tons of customers in this age of increasingly non-cash payments.
So, be sure to put up signs that alert your customers to your business’s new payment options.
Accepting Credit Card Payments On Phone: The Bottom Line
Accepting credit card payments on your phone can benefit both your business and customers, but it’s essential to decide which payment processing company and mPOS works best for your business.
Fortunately, many processors offer free mobile card readers, so you can keep hardware costs down.
Additionally, some providers have no monthly fees, no payment processing minimums, and won’t subject you to extensive underwriting. Furthermore, even large, established businesses doing a high volume of sales can implement mobile POS systems that will scale with them, affording more flexibility and mobility.
In short, accepting credit card payments with your phone is usually a good move that won’t break the bank, but will likely draw in customers.
FAQ: How To Accept Mobile Payments On Your Phone
How to accept credit card payments on my phone without a card reader?
Many payment processors offer mobile apps that can process credit card payments without a reader. This can be done through the use of payment links and scannable QR codes, or by manually entering credit card information through the app’s virtual terminal.
What app can I use to accept credit card payments?
There are several apps that businesses can use to accept credit card payments, including Square, PayPal, Clover Go, and more.
How can someone pay me with a credit card?
Businesses need an account with a payment processor and dedicated hardware or software to accept credit card payments.
Businesses are required to maintain specified business accounts, rather than personal accounts when accepting credit card payments via some of the popular processing options such as PayPal, Square, or Venmo.
