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How Mobile Credit Card Readers Work

        Money | Online Banking

Mobile Credit Card Machines and Services

The first mobile credit card reader to make waves came from Jack Dorsey, the founder of the immensely popular social media platform Twitter. His friend, Jim McKelvey, was a glass blower who was frustrated that he had to turn away customers with no cash, and pitched the idea of a smartphone card reader. The result was theSquare, a small box that plugs into the audio jack of a smartphone. It includes a slot for the physical swiping of a credit card. If you've downloaded the application, the smartphone will receive the swiped information transmitted via sound waves into the phone.

Another option is the Intuit GoPayment, from the same company that makes QuickBooks accounting software. Though you don't need QuickBooks to use the GoPayment, many businesses that already use the accounting software appreciate the compatibility for saving sales data. The GoPayment comes with it's own reader but is also compatible with other readers like the Mophie and the Bluetooth credit card reader.

VeriFone, which is a company that was already well-established in credit card processing with stationary terminals, has also come out swinging in the mobile game with the PAYware Mobile Reader. This comes with a stylus for customers to sign the touch screen (as opposed to other devices that require customers to sign with their finger). VeriFone especially prides itself on its service's security features.

Other popular readers are the RoamData RoamPay, known for its versatile compatibility, and the MagTek iDynamo, known for its security.

These popular readers are compatible with a variety of mobile devices as well as tablets, but check compatibility before you commit to one. As you process the transaction, the apps will give you the option of sending a receipt to the customer via e-mail. Of course, you don't need an attachable swiper to accept credit card payments. These and many other apps allow merchants to plug in the information manually. But swipers make for more efficient transactions.

Payment plans vary among the different services. Square, for instance, charges 2.75 percent of each transaction as of this writing. (In 2011, the company dropped its additional 15-cents-per-transaction fee.) Note that the cost is higher when you enter the numbers manually instead of swipe the card. Other services may also charge monthly fees. But the best option for you might depend on how many transactions you process and how large they are.