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A payment terminal, also known as a point-of-sale (POS) terminal, credit card terminal, PIN pad, EFTPOS terminal (or the older term PDQ terminal, which stands for Fast Data Processing
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), is a device that interacts with payment cards to make electronic money transfers. A terminal typically consists of a secure keypad (called a PIN pad) for entering a PIN, a screen, a means of collecting payment card information, and a network connection to access the Paymt network for authorization.
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The payment terminal allows the merchant to obtain the necessary credit and debit card information and transmit this data to the merchant service provider or bank for authorization and finally transfer the funds to the merchant. The terminal allows the merchant or his clerk to swipe, insert, or hold a card near the device to capture information. They are often connected to point-of-sale systems so that payment amounts and payment confirmations can be automatically transferred to the retailer’s retail management system. The terminals can also be used offline, where the merchant enters the amount into the terminal before the customer enters their card and personal identification number (PIN).
Most card terminals today transmit data via cellular networks and Wi-Fi. Legacy terminals communicate via a standard telephone line or Ethernet connection. Some also have the ability to cache transactional data for transmission to the gateway processor when a connection becomes available; the main disadvantage of this is that immediate authorization is not available at the time the card is processed, which can later lead to failed payments. Wireless terminals transmit card data using Bluetooth, Wi-Fi, cellular,
The development of payment terminals is driven by the advantage of efficiency through reduced transaction processing time and immediate authorization
Payments. In terms of security, the terminals provide d-to-d card data encryption and auditing functions. However, there are some cases of POS Pin Pad malware.
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There have also been cases of skimming at card terminals, and this has led to the abandonment of the use of the magnetic stripe to collect information using EMV standards.
Before the development of payment terminals, merchants used hand-held printers (also known as ZipZap machines) to record the information from the embossed information on the credit card onto a piece of paper with copy paper. These papers had to be given to the bank for processing. It was a cumbersome and time-consuming process.
Point-of-sale terminals appeared in 1979, when Visa introduced a bulky electronic data collection terminal that became the first payment terminal. In the same year, magnetic strips were added to credit cards for the first time. This made it possible to collect card information electronically and led to the development of payment terminals.
One of the first companies to release dedicated payment terminals was Verifone. It started in 1981 in Hawaii as a small electronics company. In 1983, they introduced the ZON terminal series, which became the standard for modern payment terminals.
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Hungarian-born George Wallner in Sydney, Australia, founded rival Hypercom in 1978, and in 1982 began manufacturing specialty payment terminals. We are talking about dominance in the Oceania region. The company signed a deal with American Express to provide them with its terminals in the US. To seal the deal, Hypercom moved its headquarters from Australia to Arizona in the US. It faced competition from VeriFone in the domestic market.
More than ten years later, in 1994, Lipman Electronic Engineering, Ltd. was established in Israel. Lippmann produced the Nurit line of processing terminals. With Verifone already firmly established in the payment processing industry when Lippman was founded, Lippman targeted an untapped niche in the processing industry. Although Lippmann has about 10% share of wired credit card terminals, they are the undisputed leader with over 95% share of wireless processing terminals in the late 1990s.
Verifone would later acquire both of these major competitors, acquiring Lipman in 2006 and the payments portion of Hypercom’s business, including its brand, in 2011.
In 1980, Jean-Jacques Poutrel and Michel Malhuitre founded Ingico in France and developed their first payment terminal in 1984. Its research and development department in Barcelona will lead the development of payment terminals for the next decade. Through a series of acquisitions, Ingico will dominate the European payment terminal market for several years. In 2001, they acquired payment terminals Bull from France and De La Rue from the UK, as well as Germany’s Epos.
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Originally, information was removed from the magnetic strip on the back of the card by swiping the card through the terminal. In the late 1990s, it began to be replaced by smart cards, which had an embedded electronic chip. This was done for added security and required the card to be inserted into a credit card terminal. In the late 1990s and early 2000s, contactless payment systems were introduced and payment terminals were updated to include the ability to read these cards using Near Field Communication (NFC) technology.
Like automated teller machines, many payment terminals are also equipped with raised tactile buttons and a headphone jack to allow blind people to complete the payment process by hearing.
There are three main global players that offer both a wide range of payment terminals, sell worldwide and continue to develop according to the latest international payment industry standards.
In most countries, terminals are provided to merchants through a variety of distributors who support and pre-configure the devices to work with local payment networks or financial institutions.
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A merchant can replace the functionality of a dedicated hardware credit card terminal with a terminal application running on a PC or mobile device such as a smartphone. Payment applications are also called point of sale or software. They usually work with dedicated hardware readers that can transmit magnetic stripe data to an app, while there are also some that also work with smart cards (using technology like EMV), although this is rarely seen on smartphone readers. In case the necessary equipment is not available, these applications usually support a manual attempt of the card number and other data. In addition, more and more devices are starting to offer built-in RFID or NFC technology for contactless or mobile payment methods, often without the need for additional external hardware.
Some payment processors offer virtual terminals to process payments without a card being installed first, such as accepting payments over the phone.
Mobile payment systems, such as those based on QR code payment terminals, bypass the need for payment terminals altogether by relying on smartphones and a printed QR code. Copyright © 2023 Media, Inc. All rights reserved. ® and related marks are registered trademarks of Media Inc.
Billing your customers is of course vital, but paying those bills is even more important. With the continuous evolution of the payments industry, there are more payment tools and platforms to choose from to help you find the perfect fit for your business based on the amount of payments you receive, the type of your business and your budget.
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I have worked with many payment companies for over 10 years and I have learned that not all payment companies are created equal. For this reason, I have compiled a list of 25 payment tools to consider for your business. These options will increase the number of payment methods you can accept, helping you attract more customers, speed up payment, and provide a secure environment for both parties during every transaction you make.
Dwolla is a developer-friendly payment system that lets you customize how you make and receive recurring, bulk or one-time payments. Offering a free account with no transaction fees, it only links to a US bank or credit union account. There are no account setup or transaction fees. However, Dwolla is exclusively for domestic payments.
Authorize.net is a payment gateway that offers domestic and some international transactions for SMBs. You can accept all major credit cards, signature debit cards, electronic checks and digital payment options such as Apple Pay, PayPal and Visa Checkout. Other features include automated recurring billing, a free set of security and fraud prevention tools and the ability to sync with your Quickbooks. While there are no annual renewal or hidden fees, there are some other fees to consider: a $49 setup fee, a $25 monthly gateway fee, and 2.9 percent plus $0.30 per transaction.
Being part of PayPal, this company has expanded the company’s payment experience and provided more options that you can pass on to your customers, such as Venmo, Apple Pay, Android Pay, Bitcoin, and debit and credit cards. There are no additional fees, including for refunds, inactivity or failed transactions. You only pay for the transactions you actually complete. After your first $50,000 in transactions, you’ll pay just 2.9 percent plus $0.30 per transaction.
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