Cover image for Card Readers vs. Card Machines

What’s the difference between a card reader and a card machine? Which option is the right one for you? Let’s compare how each may benefit your retail or hospitality business. 

Card readers and card machines are both electronic devices used to take customer payments. The biggest difference is in the features they offer and their price. 

Card readers

Card readers are small, lightweight devices making payments on the go easy. They most commonly connect to the internet through a mobile telephone’s 3G/4G. While this is the same as having a card reader with a SIM card built in it is more “fiddly” to use. Therefore, while it is fine if there are not too many transactions it is not quick enough in a fast-moving business.

Card readers are purchased outright with no monthly contract and therefore no regular charges unlike when you enter a contract for a card machine. A simple pricing structure where you pay nothing except the transaction charges makes card readers a good option for start-ups and businesses with a monthly card turnover (MCTO) of less than, on average, about £3,000 (this varies slightly depending on the average transaction value (ATV). However when the business is turning over more than this amount the extra cost of transaction fees paid with a card reader outweighs the fact that there are no fixed fees each month so it is then financially better to have a card machine on a contract. The fixed rate transaction fee is usually about 1% higher with a card reader than that paid when using a card machine on a contract. 

Card readers can offer many very useful features such as their own integrated tills with back-office information built in. They can also both print receipts and send these to the customer by email. However, good though these features are, they become more expensive than the card machine option once the “£3,000 ish” threshold is exceeded” and most card machines can offer the same features for a lower price.

Card machines 

If you decide to have a card machine on a contract the fixed charges and commitment you will have are as follows:

Contract – The length of contract varies. While it used to be 3, 4 or even 5 years it has now shortened considerably. Nowadays most contracts are for 18 months or less and many are only one month rolling. This is another reason that makes a card machine on a contract an attractive option. Even though there is no contract with a card reader, a contract on a card machine of, say, less than 6 months is not a long-term commitment.

Cost of rental – This varies from provider to provider and is often higher for machines with more features but, as a rule of thumb, rental will be between £12.00 and £25.00 pcm. Note: It is the cost of rental above all that makes the difference between the costs of the two options.

Authorisation fee – This is a few pence per transaction (usually between 2p and 5p). For a business with a high ATV this will be insignificant but in a café for example where the ATV will be around £5.00-£6.00 this needs to be considered carefully when deciding between a card reader and a card machine.

Other fees – Always check your contract before signing as many providers of card machines add extra fees for such things as next day settlement, PCI management fee, general admin charges etc.

3 types of card machine

A countertop terminal - These terminals are most suitable for establishments where all payments are made at the counter. They can connect to the internet using a telephone line or an ethernet cable plugged into your router.

A portable terminal - These can connect using a telephone line, an ethernet cable plugged into your router or WiFi to connect to the internet.

A mobile card terminal - These have a SIM card built in so you can connect using a telephone line, an ethernet cable plugged into your router, Wi-Fi or 3G/4G to connect to the internet. These can, like card readers, be used anywhere that there is a mobile signal.

Therefore, in summary, it is worth considering the points below before deciding which type of payment device will be best for your needs: 

  • Your monthly turnover
  • Your average transaction value
  • Extras charged on a card machine contract
  • Method of connectivity where you will most often need to use your card payment device.
  • The frequency of the transactions you will take.
  • The impression you’d like to make on your customers at point of sale.