Credit Card Machines

Written by Kevin Tavolaro
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Credit card machines are terminals used by merchants to automate and authenticate credit card transactions. You've probably seen them dozens of times, stationed next to the cash register, signifying whether your card was approved or denied with a series of bleeps. When credit cards were first introduced, there was no automated verification and approval system. Merchants used to actually call a card provider, should any suspicions arise about the cardholder. However, that was many years ago, and the entire process can be completed in under a minute, thanks to these machines.

Varieties of Credit Card Machines

Most credit card machines are small, simple devices, equipped with a magnetic strip reader, a small screen, a receipt printer, and a keypad. They are connected via a phone line to one of several third party databases that manage and maintain records for all of the major card providers. When a customer pays with a card, the merchant swipes it through the strip reader, which decrypts the customer's information before transmitting it to the database.

Once the information is received by the database, it is checked against the provider's records, and approved or denied, depending on the situation. The card is first checked for validity, which ensures that the card itself is not counterfeit. The database is also scanned in order to make sure that card has not been reported as lost or stolen. Certain red flags may also cause the card to be denied. If several suspiciously large purchases had recently been made, the card might be frozen. When a card is frozen, the provider halts all activity on the card until it can confirm that all recent activity was authorized.

Some credit card machines are now equipped to provide other services as well. Most merchants take advantage of the magnetic strip reader, and allow customers to pay with debit cards, as well as credit cards. Most machines can now also process electronic benefits transfer (EBT) cards, and smart cards. Manufacturers of credit card machines can also help a merchant configure their terminals to accept store-issued gift cards. Merchants who sell prepaid phone cards can also use their terminals to recharge a customer's cards. Most of these machines are very user-friendly, allowing employees to perform a number of functions after a brief introduction to the equipment.

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