Function

• In its most basic form, a credit card reader serves only to read the information encoded in a credit card's magnetic strip. According to the technology information website HighTechAid.com, a credit card's magnetic strip includes thousands of tiny magnets oriented with their positive or negative poles facing up. Issuing banks use special equipment to re-situate these magnets so they reflect a binary representation of the credit card account number, expiration date and other relevant information. When a merchant passes a credit card through a card reader, magnetic heads on the reader interpret the orientation of the magnets to read back the credit card account information.
  
  

Uses

• Depending on the type of credit card reader and its environment, readers may serve only to interpret card data and display it on a screen or to read card information for processing transactions. If a merchant has connected the card reader to a computer point of sale system, or if the card reader is part of a credit card terminal, the point of sale software may transmit the credit card account data across an Internet or dial-up connection to process financial transactions.
  
  

Accessories

• According to retail review website BuyerZone.com, credit card readers contained in point of sale systems or terminals often feature a keypad for entering transaction data and a display screen to ensure accuracy. Merchants may also connect a printer to a credit card reader to generate receipts, a barcode reader to automate transactions and even a personal computer to store and analyze transaction information for bookkeeping purposes. According to the credit card equipment vendor Intuit, other common accessories might include a personal identification number pad for collecting customer input, a pole display that shows transaction information to customers in real-time and even a connected cash drawer for a full point of sale integration.
  
  

Benefits

• Credit card readers, according to credit card processing resource Merchant Service Group, help speed financial transactions by quickly and accurately collecting a customer's payment information. Credit card readers connected to a full point of sale system can also manage the complete transaction by authorizing and charging the credit card, printing receipts and keeping detailed financial reports for the merchant's records. Credit card readers also benefit customers by facilitating a convenient payment method that does not require the use of cash or bank checks.
  
  

Considerations

• Though credit card readers allow for a number of benefits, users should keep some considerations in mind. With repeated use, credit card magnetic strips can wear out; because credit card readers can not interpret data from a worn out strip, cardholders must periodically request replacement cards. Credit card readers that process transactions may also become vulnerable to broken network or telephone connections, as a loss of connectivity to the credit card network can render the devices incapable of transaction processing.