About Credit Card Swiper Terminals

Credit card terminals are at the heart of modern commerce. From reading tens of thousands of tiny magnets in a credit card to communicating with the credit card data network, these small machines drive business in the 21st century.

History

The first credit card "swipers" were clunky, manual machines. Much like the backup manual "imprint" machines found in stores today, these machines took an imprint of a customer's card for later processing. Because this method was time consuming and costly, merchants and customers alike were less likely to use their cards when cash was readily available. That mind-set changed, however, when Visa introduced the first credit card terminal, called a swiper, in 1979.

Function

When a card is pulled through a swiper, a series of magnetic readers identifies the orientation of tens of thousands of tiny magnets in the stripe on the card's back. These magnets are physically oriented in a way that is much like standard binary code: magnets oriented downward represent "0," while magnets oriented upward represent "1." Through the arrangement of these magnets, important information such as the card number and expiration date are encoded directly on to the card, allowing the terminal to read the information and transmit it--along with pertinent sales information entered by the merchant--to the processing network. Once the transaction data is sent, the terminal waits for a reply from the issuing bank and either completes the transaction or displays one of many possible decline messages.

Types

In the early days of electronic credit card processing, a merchant needed several terminals for a seamless operation: one terminal for Visa cards, another for MasterCards, and an external printer for generating receipts. As technology improved, however, terminals became capable of processing numerous networks without the need for separate machines. In the mid-1990s, technology also allowed manufacturers to integrate the terminal's printer functionality with the swiper/processor, allowing for a compact "all-in-one" device that could neatly handle all of a merchant's credit card needs. Today, various types of credit card terminals and swipers remain on the market, though they are distinguished mostly by brand and design rather than by function.

Effects

The proliferation of credit card terminals has had a profound effect on both consumers and the economy. Buyers once reluctant to use credit cards because of their relative inconvenience now regularly turn to cards for day to day purchases. With hundreds of billions of dollars processed over the Visa and Mastercard networks every year, plus billions more over other charge networks, credit card usage has greatly improved the circulation of funds and the flow of goods. Consumers, however, continue to plunge deeper in debt with each passing year, largely because of the ease with which they can now charge purchases.

Features

The features of a credit card terminal vary from brand to brand, but a set of core features is fairly universal to all models. Along with the basics of processing sales, returns, voids, and entire batches, modern terminals also offer reprints of receipts, transaction look-ups, server tip/activity tracking, gift card processing and much more. More advanced terminals can also interface with computer systems to perform advanced customer tracking features, and even print targeted marketing material directly on the customer's receipt.

Resources

• Credit Card Terminals and History