Any merchant who accepts credit cards needs to be familiar with credit card readers. Credit card readers are devices that allow a business to safely and efficiently process credit cards. Readers decrypt the information contained on a card's magnetic strip, and use it to verify the card's authenticity. The credit card reader works in conjunction with the store's credit card terminal to access the card provider's database in order to determine whether the card should be accepted. If there has been any recent suspicious activity on the card, or if it has been reported as lost or stolen, the card reader will alert the terminal, and the sale will not proceed. The card can also be denied if the reader determines it has exceeded its limit.

New Credit Card Readers

While credit card readers have been the standard in retail outlets for years, new advances are bringing the same convenience into the home. Using a card to make purchases online or over the phone used to require relating a great deal of sensitive information across cyberspace, or through the airwaves. Although most sites conducting online transactions securely encrypt sensitive data, there are still instances of online fraud and theft.

Some companies now manufacture credit card readers that can be installed directly to a computer, allowing customers to merely swipe their card's magnetic strip through the reader each time they want to make a purchase. Other companies have developed card readers for cell phones, allowing a user to swipe their card when making a payment by phone.

Personal credit card readers, such as those now found in computers and cell phones, have a variety of benefits for both merchants and shoppers. The ease of swiping a card through a reader, as opposed to filling out a secured form in a web browser, may inspire new customers to shop online who might not otherwise do so. In addition, card readers indicate that the card itself is in the physical possession of the customer. This ensures against the type of identity fraud that can occur when a thief steals someone's information, and uses it to make a purchase. This protects the customer, as well as the merchant, who might otherwise be subjected to chargeback fees from unauthorized purchases.