If you are processing credit cards in a physical environment then you will require a credit card terminal.   Four big pieces of advice:

1. Avoid terminal leases – they are almost always a bad deal.  When credit cards were in their infancy credit card terminals were very expensive and needed to be leased.  These days, the simple kinds of credit card terminals that most merchants need only cost a few hundred dollars, which is the kind of thing for which most small businesses can just write a check.  When you lease you usually end up paying about 4x the actual price.

2. If you decide to switch Merchant Account Providers , you can easily have them reprogram the terminal (it can usually be done over the phone) for free.  Therefore, if you buy your terminal outright, even if you buy it from your Merchant Account Provider, you can always switch providers.  Don’t feel locked-in.

3. Invest in a PIN-pad and encourage your customers to use it as much as possible.  Most credit card terminals have easy and cheap ($100) add-ons that allow you to accept customer PIN numbers.  When the customer types in the PIN it becomes an “Online Debit” transaction and travels over a different (cheaper) network such as NYCE or STAR, rather than the VISA or Mastercard network.  By getting the customer to type in their PIN you will reduce your transaction cost by about 50%, which will quickly pay for the cost of the PIN-pad.

4. Be very skeptical of Merchant Account Providers that are advertising free terminals.  Nothing in life is truly free and these deals always come with a catch.  Such contracts will have a higher cancellation fee, higher startup fee, higher discount rate, or something.


Standalone Terminals

The simplest kind of terminals and the ones used by most small merchants.  Standalone terminals are ideal for service businesses and lower-volume retail businesses.

Standalone terminals connect using either a phone line (they have a modem built in) or an ethernet connection (so you can use your existing broadband for faster authorization).  Usually these terminals cost between $200-$400.


Wireless Terminals

Wireless terminals use either a local WiFi (802.11a-e) connection or a  cellular connection to process the connection.  They are good for businesses where the  point of sale moves around.  They typically cost $700-$1,000.


POS Systems

A POS system consists of several components:

  • A computer running POS software, there are lots of POS software packages, some of which are for specific industries.
  • A bar-code scanner.
  • A magnetic swipe reader.
  • A cash drawer.

In this case you will need to enter your merchant ID (which you get from your Merchant Account Provider) into the configuration of your POS software and you will be able to process credit card transactions through the POS software by swiping a card through the magnetic swipe reader.  The receipts can be printed on a variety of printer types (basically any printer that your POS software can format the receipts to fit).


Terminal Manufacturers

The major terminal manufacturers are:

  • Lipman (Nurit brand) / Verifone – recently merged
  • Hypercom
  • Linkpoint – owned by First Data
  • Ingenico – more focused on Europe


Where To Buy Terminals

You can buy them from your Merchant Account Provider, from Staples , on EBay or from a variety of specialist sellers of such products.


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