How Mobile Credit Card Readers Work

Mobile credit card readers let customers make a digital swipe.
Mobile credit card readers let customers make a digital swipe.
Geri Lavrov/Photographer's Choice/Getty Images

If you've always dreamed of starting your own business -- or if the stagnant economy has pushed you into that pursuing that dream sooner than you expected -- you can take comfort that one emerging technology could make it easier for you: mobile credit card readers.

These days, nothing turns customers away like a sign that reads "cash only." Fewer and fewer people seem to carry cash; instead, many pay for even the smallest items with a credit or debit card. This can pose a challenge for the individual or small business owner who doesn't always work out of a brick-and-mortar location. Consider mobile businesses like a food truck, as well as professionals who make house calls, like a masseuse or a dog-walker -- even the teenage babysitter or lawn mower. Their livelihood may depend on being able to accept payments easily. And today, that means accepting plastic.

Mobile credit card readers basically turn your smartphone into a credit card swiper. If you're serious about your business, chances are you already have a smartphone that you use for business purposes. If not, perhaps the ability to finally accept plastic payments on the go will make the investment in a smartphone worthwhile for you.

Several mobile credit card readers are on the market now, and they each work slightly differently. Although the basic technology is the same as the swipers you find at the ubiquitous point-of-sale terminals, each service uses its own swiping mechanism, and each comes with its own fee structure.

Over the next couple of pages, we'll explore this burgeoning technology and a few of the most popular machines and services available. The best one for you will depend on your needs. And, as security is always an issue when it comes to sensitive credit card information, we'll explore some of the accusations that competitors have made against other products.