About Wireless Credit Card Terminals

As the American economy grows increasingly reliant on credit cards as a payment method, the need for credit card processing capabilities has expanded outside the need for a traditional wired network connection. With the proliferation of cellular phones and wireless data networks, the capability to process credit cards over a secure wireless connection has lured many merchants into a wireless processing arrangement. It is important to explore the function, effects, benefits and other topics relevant to wireless credit card terminals.

Function

Many people watch merchants process credit cards in a subtle form of awe; with no wires attached to the credit card terminal and no obvious network connections, they are left wondering just how the transaction is processed. In practice, the wireless credit card terminal is little more than a modified "smart phone," limited to performing one function very, very well. When the merchant slides the credit card through the terminal, a magnetic sensor reads tens of thousands of tiny magnets on the card's magnetic strip. Oriented into a physical representation of binary code, the magnets tell the terminal vital credit card information such as account number and expiration date. The terminal then synthesizes this information into a wireless signal, which it communicates across a secure wireless data connection such as 3G CDMA or GSM, often using a special secure channel provided by major wireless carriers such as Sprint or AT&T. When the credit card network processes the transaction, a response is returned to the terminal across the same secure wireless connection, completing the transaction.

Effects

The marriage of credit card processing terminals to wireless communication protocols has had a profound effect on merchant abilities and, on a larger scale, the overall economy. By freeing merchants of the tether of wired networking, wireless terminals allow merchants to conduct business in the field, in flea markets or other areas with no telephone service, at the customer's premise, or even on site at the completion of a job. This expansion of the marketplace has lifted geographic requirements on businesses, allowing them to flourish with business they could not otherwise obtain. When merchants and small businesses prosper, so does the economy, further expanding the positive effects of wireless credit card terminals.

Benefits

As mentioned in Section 2 above, the positive effects on merchants have been profound. By freeing merchants of the wired requirements associated with traditional terminals, wireless credit card processing greatly expands the reach of many small businesses. In addition to this expansion, however, wireless terminals also have other benefits. With a wireless terminal, for example, merchants free themselves from the added expense of a dedicated telephone line. Merchants who operate in multiple locations do not have to have a dedicated terminal in each location; instead, they can move a single terminal between locations. Finally, merchants who conduct business in rural areas or areas with no telephone service (such as flea markets, gun shows or other temporary locations) can process wireless transactions when they would otherwise be limited only to cash.

Considerations

Given the tremendous benefits that come with wireless credit card terminals, one would imagine that selection of a wireless terminal would be an easy decision for a mobile merchant. Because wireless terminals require an abundance of technology not found in more traditional terminals, they are considerably more expensive than their wired counterparts. Depending on the issuing bank, some terminals may also require an additional wireless data plan from a major wireless carrier; this requirement would present an even further cost, sometimes making wireless terminals prohibitively expensive for small business owners.

Misconceptions

At first glance, some consumers may express concern over the security of wireless credit card processing. In actuality, however, wireless terminals are as secure or even more secure than their wired counterparts. Modern wireless terminals use high-grade data encryption to transmit sensitive account information across an already digitally secured wireless connection, making their sensitive transmissions virtually impervious to technological eavesdropping.