Credit card terminals are machines which are designed to process credit cards in a retail setting. It is necessary to use a credit card terminal when running credit cards, as the terminal communicates with the card issuer to ensure that the card is valid and that there is not a block or hold on the credit card. Numerous styles and designs with an assortment of options are available from several manufacturers, many of whom team with banking services to provide credit card terminals to businesses when they open an account to process credit cards.
The credit card terminal is used at the point of sale. When a customer wants to use a credit card to pay for goods or services, the card is swiped through a terminal which reads the information on the magnetic strip embedded in the card. The credit card terminal communicates with a central computer, which confirms that the card is valid and that the customer has enough credit for the transaction. Within seconds, an approval bounces back to the credit card machine, which confirms that the transaction is valid and issues a receipt. If there is a problem, an error code is displayed, indicating that the credit card is not valid, could not be read by the machine, or it might be stolen.
There are two basic styles for credit card terminals. Some are designed to be operated entirely behind the counter by the clerk. The customer does not see or interact with the terminal, which may be integrated into a point of sale system, instantly transmitting data to the computer about the transaction. In other cases, credit card terminals are meant to be used entirely by the customer, as is often the case at supermarket check stands. When credit card terminals are enabled with debit card abilities, they are set up for customer use, so that the customer can enter his or her personal identification number.
Some small businesses without a point of sale system use standalone credit card terminals. At the end of the day, the credit card terminal prints a final report, which must be reconciled with the rest of the financial reports for the business. In other instances, the credit card terminal is integrated into the point of sale system, which creates one central report at the end of the day with all of the financial data.
In both cases, when financial data is transmitted through credit card terminals, money is transferred into the account of the business from the card holder's account. At the end of the month, the business receives a statement from the credit card process, requesting a percentage of the total credit card income. Typically there is also a per-card processing charge.
For consumers who wonder about credit card minimums or businesses which refuse to accept credit cards, the Byzantine payment system is usually to blame. Most business owners would like to be able to accept credit cards, since they are in popular demand. However, the cost of processing may be more than the business can bear, especially in the case of a small business which cannot negotiate better contract terms.
Many credit card terminals come with an embedded printer, while others are designed to output to another receipt printer. In either case, two copies of the receipt are printed so that the customer can sign one for the store's records, and the customer can take one home. Most businesses keep signed records for up to one year before disposing of them securely, typically shredding them to eliminate personal information.