The Role of the Terminal in Credit Card Processing


The terminal is the workhorse of credit card processing. Without it, the job just doesn’t get done. Whether you use a point-of-sale (POS) countertop model, a cardreader that attaches to a smartphone or mobile device, a sleek handheld version for wireless processing or a virtual terminal for e-commerce transactions, it is the conduit through which the process flows. Consequently, it’s important for merchants to have a basic understanding of how a credit card terminal works so they can choose the right one for their processing needs.

A credit card terminal’s function is to retrieve the account data stored on the payment card’s EMV® microchip or a magnetic stripe — including the card number, expiration date and other identifying information — and pass it along to the credit card processor (also known as a merchant account provider). How it does this depends on the type of transaction being processed.

In card-present (face-to-face) transactions where the card and cardholder are physically present, the card is connected to the reader housed in the POS terminal. The data is captured and transmitted electronically to the merchant account provider, who handles the authorization process with the issuing bank and credit card networks.

When the card is not present (CNP) — as is the case in mail order, telephone order and online transactions — the merchant enters the information manually using a keypad on the terminal, or the e-commerce shopper enters it on the website’s payment page. The back half of the process remains the same.

The actual data transmission goes from the terminal through a phoneline or Internet connection to a credit card processor like TransFirst®, which routes it to the bank that issued the credit card for authorization. After checking on the cardholder’s available credit line, the bank either accepts or declines the transaction and relays its decision back to the processor, who sends it on to the waiting merchant. Remarkably, this complex process usually takes just seconds to complete.

Selecting the right terminal for your credit card processing needs depends largely on the type of business you run and the sorts of transactions you process. That’s because terminals are highly specialized and provide different services.

For example, a POS retail terminal with a phone or Internet connection works best in a traditional retail setting that deals exclusively in card present transactions. For a business with a mobile sales or work force, a mobile credit card processing option like ProcessNow® from TransFirst relies on a downloadable app to transform a smartphone or tablet into a credit card terminal equipped with a USB cardreader.

Wireless terminals are compact and slip easily into a pocket or briefcase, allowing you to accept credit cards in the field without relying on a phone connection. If you process debit cards, you’ll need a PIN pad in addition to your terminal so cardholders can enter their personal identification number to complete the sale.

At TransFirst, we offer a broad range of PCI-compliant terminals to meet every need. We believe an informed business decision benefits your bottom line, so we’re committed to sharing our credit card processing expertise with you. Our trained representatives will advise you on the credit card terminal that’s right for your business and your budget, and they’ll make sure you and your staff gets the training needed to maximize its features. Start accepting credit cards today with TransFirst.

EMV is a registered trademark or trademark of EMVCO LLC in the United States and other countries.


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federally-registered U.S. service marks of Total System Services, Inc. TransFirst is a registered ISO/MSP of: Wells Fargo Bank, N.A., Walnut Creek, CA; Synovus Bank, Columbus, GA; and Deutsche Bank, New York, NY; for Visa® and MasterCard® transactions only. TSYS Merchant Solutions is a registered ISO/MSP of Wells Fargo Bank, N.A., Walnut Creek, CA and Synovus Bank, Columbus, GA.