When you swipe your credit card, how often do you think about the credit card reader itself? Whether or not you’ve thought about it recently, the credit card reader is an important part of our current payment processing systems. These credit card readers, also known as point of sale (POS) terminals, read the cardholder’s information—full name, card expiration date, and account number—on credit cards to facilitate easy and quick transactions. 

In short the purpose of a credit card reader is to take card payments.

The first step in this payment transaction flow is authorization. After you swipe, insert, or tap your credit card, the credit card reader passes the transaction request to the merchant bank. The merchant bank sends a request to the issuing bank, which checks to see if the cardholder has enough cash or credit before authorizing the movement of funds to the merchant bank. The POS terminal keeps track of these authorizations in batches for future settlements. Depending on merchant preferences, the actual transfer of funds can happen within one to two business days. 

Credit card reader functionality differs slightly on the kind of card you own. Much like its name reveals, magnetic stripe cards store payment information in the magnetic strip on the back. After swiping the card, the information is sent to the reader and then the acquiring bank. However, magnetic stripe cards have become less popular because of their fraud vulnerability. The strip contains static information, which is easily obtained with credit card skimmers and accessed by fraudsters. Chip (EMV) cards have largely replaced magnetic stripe cards due to their encrypted data feature. The chip, which contains cardholder information, and the reader allow for the encrypted data to change for every transaction, making it more secure and less accessible to fraudsters. 

There are also credit card readers for near field communication (NFC) or contactless payments, which usually involve holding a smartphone or wearable device over a reader. Like chip cards, NFC payments are safer than magnetic stripe cards because they utilize encrypted and changing data for each transaction. Services such as Apple Pay or Samsung Pay are examples of NFC payment apps that have become increasingly popular during the coronavirus pandemic.

Security and privacy are two main concerns revolving around credit card readers. In our current digital age, secure payment processing is integral to the success of a business and establishing consumer loyalty and trust. One way to do this is to ensure that the credit card reader is compliant with Payment Card Industry Data Standards (PCI DSS). These are a set of security standards featuring rules on identity theft, fraud prevention, chargebacks, and payment information storage designed to protect customers and increase card reader accountability. Some services, including big names like Square, do not require businesses to individually validate themselves because they as a whole are already compliant with PCI DSS. 

Deciding on which credit card reader to utilize depends on various factors, including EMV support, speed of bank deposits, pricing structures, and setup difficulty. Across the U.S. and the U.K., perhaps the top credit card readers for small businesses are Square and iZettle.

Square is the leading American company of mobile credit card machines. It provides a small  square card swipe reader and mobile point-of-scale (mPOS) application for Apple and Android devices and is compatible with all major credit cards, including Visa, Mastercard, and American Express. Square offers simple fees and numerous add-on features including offline mode and business management tools like QuickBooks. Similarly, iZettle is the leader in the U.K. market. It features a simple PIN pad, accepts major credit cards, and quick transaction approvals for contactless cards. iZettle has no setup fees and also gives businesses the opportunity to launch an e-commerce shop.

Compare all UK credit card readers.

One of the highest-ranked credit card readers for small businesses to take card payments is the Square card reader. It has expanded its product offerings in recent years, including Square Stand or Square Register, for many foodservice and retail businesses.

The Square card reader is a reliable option for small businesses because of its simple setup. The mobile credit card readers are paired with Square Point of Sale, the payment app that allows customers to easily dip, swipe, or tap their cards for fast transactions. The app offers a host of other functions, including accepting cash and gift cards, processing offline transactions, tracking live inventory, and saving customer cards securely for future purchases. Square Point of Sale can be used with various Square hardware, so business owners can upgrade and add services or physical accessories whenever they need to without incurring high costs. These hardware options include Square Readers for contactless and chip cards as well as magstripes. There is also Square Stand for contactless and chip cards, Square Terminal (all-in-one terminal for credit cards), and Square Register (a countertop model).

The Square reader offers simple, transparent, flat-rate credit card processing fees per transaction with no long-term contract. These flat rates make it easy to track the cost of handling different types of cards and card brands. For magnetic stripe (magstripe), EMV, and NFC (like Apple Pay) cards, there is a 2.75% rate; for keyed-in transactions where you manually type in card data on the Square PoS app, there is a 3.5% rate. There are no account fees, and the optional “fees” are for add-on services based on the type of processing equipment. Some free add-on software features include eGift cards, analytics, and team management services to help grow businesses. These different options give business owners the ability to decide which rate works best for them depending on their specific needs.

In addition to having a pay-as-you-go system, business owners have the ability to decide when they want to receive the money from transactions, which is usually within one to two business days. Another advantage of Square, a merchant aggregator, is that your business is set up under Square’s master merchant account. This makes for an easy application process, allowing you to set up your business quickly on the platform. Customer service is available by phone, email, and social media such as Twitter. Their website features many FAQs, articles, how-to guides, and the customer service team is available from Monday to Friday from 6 a.m. to 6 p.m. PT.

PDQ machines are the old name for credit card readers when they were first introduced to the UK.The name PDQ stands for "Process Data Quickly" however they were a bit different to the modern card machines. PDQ machines were swipe machines and then a receipt would be printed and you'd sign the receipt, the merchant would then check the card's signature against your signature and approve the transaction if it matched.

PDQ machines were not the most efficient so we moved to the chip and pin readers you're more familiar with. Chip and pin readers rely on cards with the more secure chip that is dipped into the machine and then a pin is given. We'd always recommend the newer chip and pin readers when choosing a card reader.

Check out the full list of chip and pin readers.

A magnetic strip reader machine is an older card reader machine similar to the pdq machine that only lets you swipe your card, they are less safe than the chip and pin readers but most cards still have a strip you can use to process and take card payments.

We'd recommend choosing a more modern machine so you can also take Apple Pay and other NFC payments, but the magnetic strip reader will work with most cards. See the full list of card readers.

The PayPal Card Reader (UK),PayPal Terminal or PayPal Here is one of the most known card readers in the UK. It's a small calculator type chip and pin device that is paired to a smart phone via bluetooth. It's charged via a micro-USB and will last for 100 transactions or 7 days. It can take chip cards or swipe at the top of the reader.

Is there VAT on PayPal fees?

PayPal's fees that you pay are not inclusive of VAT but financial services are not charged VAT so you don't need to worry about that. When you charge a customer, you will need to add VAT on top of what you charge PayPal's reader doesn't do this automatically. So if you're selling an item for 100 GBP and you haven't already included VAT which until September 2021 is 12.5% then you'd need to type in 112.5 GBP.

What are the different paypal card machines?

There is only one PayPal card reader in for the UK which is the PayPal Here, it looks like a small calculator. You can see how it looks at by looking at the full comparison list of credit card readers.

What are the SumUp charges?

SumUp charges 1.69% fees on most card charges.

Sumup vs Square

SumUp's fees are 1.69% vs the 1.75% Square card reader fees. SumUp offers three card readers from £29-£129 and Square has two one for £19 and one for £199 both top of the line readers have printers. The Square reader is connected to Square POS service and their online gateway so it's great if you also sell online but otherwise SumUp is cheaper if you're just accepting payments in store.

Check out every detail of each card reader.

The Stripe card readers are the BBPOS WisePad 3 reader and the Verifone P400. So each one is from a different vendor, they both charge 1.4% + 10 cents a transaction. The BBPOS WisePad 3 is a chip, pin , swipe and NFC reader it has a small key pad and small screen, it charges via Micro USB. The Verifone P400 is accepts all payment methods is is a more permanent machine with a larger interface.

Shopify has one card reader on the UK market that costs £59.00, it comes with three tiers of subscription and comes with the full Shopify ecommerce platform as well, so if you'd use it these card readers are a good call, however the fees are a bit higher than others at around 2.4%.

Worldpay is a payments company that offers a number of payment products, as a part of Worldpay's epos range they have 3 card readers and 9 plans on offer.

Check out the Worldpay epos card readers.

What is the iZettle chip and pin reader?

The iZettle chip and pin reader is a machine that lets you take card payments, it is known as the iZettle reader 2 it takes chip and pin, swipe and NFC and paywave payments. It charges 1.75% fees and costs £29.

What are the iZettle costs?

There are a few costs associated with the iZettle card reader, the iZettle reader 2 costs £29 and the Zettle Ocean Reader and Dock set (made from recycled ocean plastic) costs £98.

 iZettle transaction fee - Each reader has the same transaction fee of 1.75% for each card transaction.


Who are the iZettle competitors?

There are a number of iZettle alternatives for UK businesses, those with similar card transaction fees are Square, SumUp, PayPal (who owns iZettle) myPOS and many more, check out and compare the full list of iZettle alternatives.


Can I take payments over the phone with iZettle?

Unfortunately not with iZettle, you need a virtual terminal to accept over the phone card payments and iZettle doesn't offer one.