A payment terminal, also known as a point of sale (POS) terminal, credit card machine, card reader, PIN pad, EFTPOS terminal (or by the older term as PDQ terminal which stands for "Process Data Quickly"), is a device which interfaces with

payment card Payment cards are part of a payment system issued by financial institutions, such as a bank, to a customer that enables its owner (the cardholder) to access the funds in the customer's designated bank accounts, or through a credit account and ...

s to make

electronic funds transfer Electronic funds transfer (EFT) is the transfer of money from one bank account to another, either within a single financial institution or across multiple institutions, via computer-based systems. The funds transfer process generally consists ...

s. The terminal typically consists of a secure keypad (called a PINpad) for entering PIN, a screen, a means of capturing information from payments cards and a network connection to access the payment network for authorization. A payment terminal allows a

merchant A merchant is a person who trades in goods produced by other people, especially one who trades with foreign countries. Merchants have been known for as long as humans have engaged in trade and commerce. Merchants and merchant networks operated i ...

to capture required

credit Credit (from Latin verb ''credit'', meaning "one believes") is the trust which allows one party to provide money or resources to another party wherein the second party does not reimburse the first party immediately (thereby generating a debt) ...

and

debit card A debit card, also known as a check card or bank card, is a payment card that can be used in place of cash to make purchases. The card usually consists of the bank's name, a card number, the cardholder's name, and an expiration date, on either ...

information and to transmit this data to the

merchant services Merchant services is a broad category of financial services intended for use by businesses. In its most specific use, it usually refers to merchant processing services that enables a business to accept a transaction payment through a secure (encr ...

provider or

bank A bank is a financial institution that accepts Deposit account, deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital m ...

for authorization and finally, to transfer funds to the merchant. The terminal allows the merchant or their client to swipe, insert or hold a card near the device to capture the information. They are often connected to

point of sale The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice f ...

systems so that payment amounts and confirmation of payment can be transferred automatically to the merchant's retail management system. Terminals can also be used in stand alone mode, where the merchant keys the amount into the terminal before the customer present their card and

personal identification number A personal identification number (PIN; sometimes RAS syndrome, redundantly a PIN code or PIN number) is a numeric (sometimes alpha-numeric) passcode used in the process of authenticating a user accessing a system. The PIN has been the key to faci ...

(PIN). The majority of card terminals today transmit data over

cellular network A cellular network or mobile network is a telecommunications network where the link to and from end nodes is wireless network, wireless and the network is distributed over land areas called ''cells'', each served by at least one fixed-locatio ...

connections and

Wi-Fi Wi-Fi () is a family of wireless network protocols based on the IEEE 802.11 family of standards, which are commonly used for Wireless LAN, local area networking of devices and Internet access, allowing nearby digital devices to exchange data by ...

. Legacy terminals communicate over standard telephone line or Ethernet connections. Some also have the ability to cache transactional data to be transmitted to the

payment processor A payment processor is a system that enables financial transactions, commonly employed by a merchant, to handle transactions with customers from various channels such as credit cards and debit cards or bank accounts. They are usually broken do ...

when a connection becomes available; the major drawback to this is that immediate authorization is not available at the time the card was processed, which can subsequently result in failed payments. Wireless terminals transmit card data using

Bluetooth Bluetooth is a short-range wireless technology standard that is used for exchanging data between fixed and mobile devices over short distances and building personal area networks (PANs). In the most widely used mode, transmission power is li ...

, cellular, or even satellite networks in remote areas and onboard airplanes. Prior to the development of payment terminals, merchants would capture card information manually using ZipZap machines. The development of payment terminals was led by the advantage of efficiency by decreased transaction processing times and immediate authorisation of payments. In terms of security, terminals provide end to end card data

encryption In Cryptography law, cryptography, encryption (more specifically, Code, encoding) is the process of transforming information in a way that, ideally, only authorized parties can decode. This process converts the original representation of the inf ...

and auditing functions. Nevertheless, there have been some cases of POS pin pad malware. There have also been incidence of skimming at card terminals and this led to the move away from using the magnetic strip to instead capturing information using

EMV EMV is a payment method based on a technical standard for smart card, smart payment cards and for payment terminals and automated teller machines which can accept them. EMV stands for "Europay International, Europay, Mastercard, and Visa Inc., ...

standards.

History

Prior to the development of payment terminals, merchants would use manual imprinters (also known as ZipZap machines) to capture the information from the embossed information on a credit card onto a paper slip with carbon-paper copies. These paper slips had to be taken to the bank for processing. This was a cumbersome and time-consuming process. Point of sale terminals emerged in 1979, when Visa introduced a bulky electronic data capturing terminal which was the first payment terminal. In the same year magnetic stripes were added to credit cards for the first time. This allowed card information to be captured electronically and led to the development of payment terminals. Betalings terminal

One of the first companies to produce dedicated payment terminals was

Verifone Verifone, Inc. is an American multinational corporation headquartered in New York City, New York. Verifone provides technology for electronic payment transactions and value-added services at the point of sale, point-of-sale. Verifone sells merc ...

. It started in 1981 in Hawaii as a small electronic company. In 1983 they introduced the ZON terminal series, which would become the standard for modern payment terminals. Hungarian-born George Wallner in

Sydney Sydney is the capital city of the States and territories of Australia, state of New South Wales and the List of cities in Australia by population, most populous city in Australia. Located on Australia's east coast, the metropolis surrounds Syd ...

Australia Australia, officially the Commonwealth of Australia, is a country comprising mainland Australia, the mainland of the Australia (continent), Australian continent, the island of Tasmania and list of islands of Australia, numerous smaller isl ...

, founded rival Hypercom in 1978 and in 1982 started producing dedicated payment terminals. It went on to dominate the

Oceania Oceania ( , ) is a region, geographical region including Australasia, Melanesia, Micronesia, and Polynesia. Outside of the English-speaking world, Oceania is generally considered a continent, while Mainland Australia is regarded as its co ...

region. The company signed a deal with

American Express American Express Company or Amex is an American bank holding company and multinational financial services corporation that specializes in payment card industry, payment cards. It is headquartered at 200 Vesey Street, also known as American Expr ...

to provide its terminals to them in the US. To consolidate the deal, Hypercom moved its head office from Australia to

Arizona Arizona is a U.S. state, state in the Southwestern United States, Southwestern region of the United States, sharing the Four Corners region of the western United States with Colorado, New Mexico, and Utah. It also borders Nevada to the nort ...

in the US. It then faced head-to-head competition with

VeriFone Verifone, Inc. is an American multinational corporation headquartered in New York City, New York. Verifone provides technology for electronic payment transactions and value-added services at the point of sale, point-of-sale. Verifone sells merc ...

on its home market. Over a decade later in 1994, Lipman Electronic Engineering, Ltd. was established in Israel. Lipman manufactured the Nurit line of processing terminals. Because of Verifone's already firm place in the payment processing industry when Lipman was established, Lipman targeted an untapped niche in the processing industry. While, Lipman held about a 10% share in wired credit card terminals, they were the undisputed leader, with more than 95% share in wireless processing terminals in the late 1990s. Verifone would later acquire both of these major rivals, acquiring Lipman in 2006 and the payment part of the Hypercom business including its brand in 2011. In 1980, Jean-Jacques Poutrel and Michel Malhouitre established

Ingenico Ingenico is a French merchant services technology company, that facilitates secure Electronic Funds Transfer, electronic transactions. The company expanded as a manufacturer of point of sale (POS) payment terminals to also include complete mercha ...

in France and developed their first payment terminal in 1984. Its Barcelona-based R&D unit would lead the development of payment terminals for the next decade. Ingenico, through a number of acquisitions, would dominate the European market for payment terminals for a number of years. They acquired French based

Bull A bull is an intact (i.e., not Castration, castrated) adult male of the species ''Bos taurus'' (cattle). More muscular and aggressive than the females of the same species (i.e. cows proper), bulls have long been an important symbol cattle in r ...

and UK based

De La Rue De La Rue plc (, ) is a British company headquartered in Basingstoke, England, that produces secure digital and physical protections for goods, trade, and identities in 140 countries. It sells to governments, central banks, and businesses. Its ...

payment terminal activity as well as German Epos in 2001. Initially, information was captured from the magnetic strip on the back of the card, by swiping the card through the terminal. In the late 1990s, this started to be replaced by

smart card A smart card (SC), chip card, or integrated circuit card (ICC or IC card), is a card used to control access to a resource. It is typically a plastic credit card-sized card with an Embedded system, embedded integrated circuit (IC) chip. Many smart ...

s where an electronic chip was embedded in the card. This was done for added security and required the card to be inserted into the credit card terminal. In the late 1990s and early 2000s

contactless payment Contactless payment systems are credit cards and debit cards, key fobs, smart cards, or other devices, including smartphones and other mobile devices, that use radio-frequency identification (RFID) or near-field communication (NFC) for making sec ...

systems were introduced and the payment terminals were updated to include the ability to read these cards using

near field communication Near-field communication (NFC) is a set of communication protocols that enables communication between two electronic devices over a distance of or less. NFC offers a low-speed connection through a simple setup that can be used for the boots ...

(NFC) technology.

Typical features

* Key entry (for customer not present mail and telephone order) * Tips/gratuities * Refunds and adjustments * Settlement (including automatic) * Pre-authorisation * Payments using

enabled devices * Remote initialisation and software update *

Point of sale The point of sale (POS) or point of purchase (POP) is the time and place at which a retail transaction is completed. At the point of sale, the merchant calculates the amount owed by the customer, indicates that amount, may prepare an invoice f ...

(POS) integration * Multi-merchant capabilities * Pen or PIN authorization by the customer * Surcharge function * Secure password operation * Additional

PIN pad A PIN pad or PIN entry device is an electronic device used in a debit, credit or smart card-based transaction to accept and encrypt the cardholder's personal identification number (PIN). PIN pads are normally used with payment terminals, autom ...

attachments Like

automated teller machines Automation describes a wide range of technologies that reduce human intervention in processes, mainly by predetermining decision criteria, subprocess relationships, and related actions, as well as embodying those predeterminations in machine ...

, many payment terminals are also equipped with raised tactile buttons and an earphone jack which allow the blind to audibly finish the payment process.

Major manufacturers

There are three main global players who offer both a wide range of payment terminals, sell worldwide, and continue to develop to the latest international payment industry standards. In most countries terminals are provided to merchants via a multitude of distributors that support and pre-configure devices to operate with local payment networks or

financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

s. *

* PAX Technology *

Alternatives

A merchant can replace the functionality of dedicated credit card terminal hardware using a terminal application running on a PC or

mobile device A mobile device or handheld device is a computer small enough to hold and operate in hand. Mobile devices are typically battery-powered and possess a flat-panel display and one or more built-in input devices, such as a touchscreen or keypad. ...

, such as a

smartphone A smartphone is a mobile phone with advanced computing capabilities. It typically has a touchscreen interface, allowing users to access a wide range of applications and services, such as web browsing, email, and social media, as well as multi ...

. The payment acceptance applications are also called tap-on-phone or software

. They usually work with dedicated hardware readers that can transfer magnetic stripe data to the application, while there are also some that also work with

s (using technology such as

), although this is rarely seen on smartphone readers. In case the necessary hardware is unavailable, these applications usually support manual entry of the card number and other data. In addition, more and more devices are beginning to offer built-in

RFID Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. An RFID system consists of a tiny radio transponder called a tag, a radio receiver, and a transmitter. When tri ...

or NFC technology to accommodate contactless or

payment methods, often without requiring additional external hardware. Some

s offer ''

virtual terminal In Open system (computing), open systems, a virtual terminal (VT) is an application service that: # Allows Server (computing), host terminals on a multi-User (computing), user computer network, network to interact with other hosts regardless of ...

s'' for processing payments without the card being present, for example when taking payments over the phone.

Mobile payment Mobile payment, also referred to as mobile money, mobile money transfer and mobile wallet, is any of various payment processing services operated under financial regulations and performed from or via a mobile device. Instead of paying with cas ...

systems such as those based on

QR code payment A QR code payment is a mobile payment method where payment is performed by scanning a QR code from a mobile app. This is an alternative to doing electronic funds transfer at point of sale using a payment terminal. This avoids a lot of the infra ...

s bypass the need for payment terminals altogether, relying on

s and a printed QR code.

References

{{Credit cards Merchant services Credit card terminology Banking technology Japanese inventions Payment systems Telecommunications-related introductions in 1979

History

Typical features

Major manufacturers

Alternatives

See also

References