Merchant 101: What is a Credit Terminal?

A credit terminal is an electronic device merchants (businesses) use to complete credit or debit cards transactions. The credit card or debit card transaction begins when the customer's card is either swiped through the terminal's card reader or the card information is keyed onto the terminal's key pad. Within the last decade merchants have been given additional opportunities to complete more transactions because these point-of-sale (POS) devices can now allow business to issue and accept gift cards and provide check verification and processing services.

The credit terminal is available to businesses in two (2) formats: The wired and wireless terminals. The wired terminals can be connected to a standard telephone line or to the internet. The internet connected terminals are recommended for quick serve restaurants (fast food), convenience and retail stores that require very fast transaction processing. Terminals connected to the internet can process a transaction in less than 2 seconds. This is an important consideration for business that experience rush or peak times during their day to day operations. The telephone connected terminals are suited for businesses where internet may not be available or for the businesses that do not have a demand very fast transaction processing. The wireless terminals have long and short range capabilities. The long range terminal works very similar to cell phones. The merchant can take this credit terminal with them to the field and can process the transaction with the customer any time and any place. The short range terminal work similar to a laptop computer connected to a Wifi. The merchant can only use the short range terminal with in the range of the Wifi network. The short range wireless terminal is best suited for restaurants that services patrons that it inside the restaurant and outside the restaurant in a patio type setting.

Merchants have alternative choices over using the credit terminal. The first alternative is the IVR service. In the world of merchant processing Interactive Voice Response (best known as IVR) is a payment platform system that automates the transaction interactions with the merchants. The IVR payment system works by using pre-recorded voice prompts and menus to present information and options to the merchants. The merchants can respond to the voice prompts by using a touch-tone telephone keypad to enter the appropriate information as requested by the IVR. In addition to the touch-tone keypad interaction some IVR services allow the merchant the ability to respond to the pre-recorded voice prompts and menus via voice recognition technology. The IVR payment platform allows merchants the ability to get pre-authorizations before attempting transactions. Once the merchants the authorization they can complete the transaction and get a confirmation that the transaction was approved.

The second alternative to the credit terminal (physical point of sale system) is the virtual terminal. The virtual terminal is web-based payment processing system that gives the merchant the ability to manually key in the cardholder's card payment information. Through this web-based processing system the merchant (the account holder) logs onto a PCI compliant terminal with their username and password, enters their customer's credit card information, expiration date, and security code, the transaction amount and invoice number is entered, and after the transaction is completed the merchant receives a confirmation that the payment was accepted or declined.

The third alternative to the credit terminal merchants can use is the payment gateway. It is an e-commerce solution that uses an online shopping cart to capture the customer's order and card payment information. With this solution it is the merchant's customers who manually key in their payment information on shopping cart linked to the merchant's website.