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How Does The Payment Terminal For Businesses Work?

A payment terminal is an electronic device used for accepting various types of commercial transactions. A typical business-use payment terminal allows a merchant to accept payment from customers by debit or credit card. Most terminals are PIN-based. It means the customer must enter their PIN at the keypad of the machine to authorize the transaction.

Hence, the terminal also has a PIN pad which is used for standard ATM transactions. The payment terminal will normally connect to the bank’s head office or financial institution, where a business owner can check their account balance and transaction history.

Component of payment terminal is 

  • PIN pad,
  • 2D barcode scanner,
  • thermal printer,
  • Magnetic Stripe Reader (MSR) or Payment Card Encoder (PCE)

How does the payment terminal work?

Once the business owner(merchant) selects the type of transaction they will accept on their terminal, it is ready to receive a card payment using either 3 of the available methods of acceptance: PIN, signature, or No CVM(No Card Verification).

Once the card is swiped through the MSR or PCE, it signals for a connection to be made with the payment processor/bank. That’s when they are asked if they would like to accept this particular card using one of the three acceptance methods.

The customer will then be prompted to select the authorization method, either PIN, sign, or No CVM (no verification). Cardholders with an EMV card enabled for Chip & PIN may only choose the PIN option. The merchant has already set up their business preferences for each transaction which will determine how they are presented with the choices to the customer.

Today, most European transactions are Chip & PIN for security reasons, but that is not always the case in other countries where magnetic stripe readers are still available.

Transactions can be processed in three different ways, which will either require.’

  • No CVM’ (no pin or signature),
  • ‘signature only,’ or
  • ‘PIN. ‘

Use Epos Payment Terminals

There are more ways to pay with Epos Now Payments Terminals, you have two different options to play with. You can either swipe or insert your card into the Epos Now payment terminal.

The process is similar for swipes and insertions because the payment terminal automatically detects which method to use based on how you have inserted/swiped your card.

Inserting Card into the Epos Now Payment Terminal

– To insert your card, you need to remove the magnetic stripe from the back of your card.

– Insert your credit/debit card into the Epos Now payment terminal with the stripe facing downwards and towards the PIN pad.

Swiping Card into Epos Now Payment Terminal

– You can swipe your card either on the face or back of the Epos Now terminal.

– Identify the slot where you need to swipe your card and remove the magnetic stripe from the back of your card.

– Insert your credit/debit card into the Epos Now payment terminal with the stripe facing downwards and towards the PIN pad.

After inserting the card, enter the transaction amount. The customer must press “ENTER” to finalize the payment.

Check out more at eposnow.com

If you have a chip card, you will need to insert it into the Epos Now payment terminal with the chip facing up and towards the PIN pad. In case of errors or issues during magnetic stripe transactions using MSR, the customer will be asked to swipe the card in the MSR slot. These options will be set up during the terminal configuration or by your acquirer.

To authorize a transaction, the customer slides their card through the 2D barcode scanner to read the card details on the magnetic strip on their card. It can be used in conjunction with signature or PIN-based transactions for cards with Chip & PIN technology.

Alternatively, some terminals allow a card to be swiped and the customer to enter their four-digit PIN with the PIN pad at the payment terminal.

Once this has been completed, consumers can sign on the signature pad and enter their 4-digit PIN if required. The cardholder will then be asked to check the transaction and press OK or Cancel.

It is best to avoid the following fees:

  • ATM operator surcharge;
  • Card issuing bank interchange fee;
  • Non-card issuing bank Interchange Fee;
  • Transaction Fee (e.g., Administration, Statement);
  • POS Terminal fee (on top of Credit Card Transaction Fees)

How does the NFC (Near Field Communication) chip work?

NFC chips are commonly found in mobile phones but can be physically embedded into payment terminals. NFC allows small amounts of data to be passed between devices over short distances (usually less than 4 cm).

It means that someone could potentially use their mobile phone to wirelessly pass along credit card information rather than swiping the credit card itself through the terminal.

A new NFC phone can be used as a credit card terminal to accept payments. It is the only way a company or business owner could use an NFC chip without having it embedded into a payment terminal.

Payment terminals with NFC support will have the standard electronic chip and magnetic stripe reader for regular cards and include wireless technology, which will allow the transaction to be made without requiring a physical swipe of the card.

The most common form of NFC is now available on many smartphones. With that comes securely storing sensitive data such as credit card information, membership numbers, or even passwords.

But how exactly are these transactions made?

Essentially, all you have to do is press your finger against the payment terminal, and it will automatically detect, via NFC, which card you want to use for this specific transaction.

It will then ask for a PIN or signature (more on that later) and immediately let you make your purchase. The whole process takes seconds, far quicker than the manual swipe and sign method many of us are used to.

What you need to pay by NFC 

In short, you will need a device with an NFC chip and the ability to download an app for it if one isn’t pre-loaded on your phone already. In addition, it is also possible for businesses to add a sticker with the necessary information on them to their terminals.

Different technologies have been developed for NFC chips. Each has its compatibility limits and requires different types of payment terminals.


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