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Differences Between a Credit Card Machine and POS System

Posted: March 29, 2021 | Updated: September 25, 2023

Starting out, many new business owners may feel baffled by a huge list of technologies and terms, especially in the payment industry, such as POS systems, credit card terminals, credit card processing, and so more. Many startups may feel confused when selecting the right device or technology for handling their day-to-day transactions and sales.

Although both POS systems and credit card terminals allow merchants to accept multiple payment forms besides cash, they have their differences. In truth, we cannot say that one is better than the other. However, there is always the most suitable device based on your business model and requirements.

So, before deciding the right system for you, you need to assess what your particular organization needs. In the following paragraphs, we will learn the distinction between the two most significant and yet the most confused technologies – a POS (point-of-sale) system and a credit card machine.

What is a Credit Card Machine?

A credit card terminal is a payment gateway that doesn’t come with many features and capabilities besides its fundamental ability to process credit cards. In other words, a credit card terminal, also known as EDC Terminal (or Electronic Data Capture Terminal), enables merchants to accept debit or credit card payments.

Based on the terminal you are using; some credit card devices may come with unique features like connecting to a check reader or even processing loyalty cards or gift cards. However, most of them are simply responsible for swiping or tapping debit or credit cards to read the information encrypted in the customers’ cards.

The moment the customer’s card is swiped against the credit card terminal device, the information stored on the card is submitted to the machine for further processing. This method is considered highly cost-effective and, in fact, an eCommerce business depending heavily on its online sales cannot do without a credit card terminal.

There are numerous types of credit card terminals, including smaller, hand-held ones, which are generally easy-to-use and lightweight. Some of these devices come with a screen, a magnetic stripe reader, an EMV-chip reader, a keypad, and a signature pen. What’s more, some of them even come with a printer for payment receipts.

To put it briefly, not all credit card terminals are the same. They vary depending on the manufacturer and the brand selling it.

Therefore, finding the most suitable credit card terminal for your specific business is crucial. Besides, businesses whose sales are extended beyond one single market or location, would require a wireless terminal machine to cater to its unique payment processing needs.

What is a POS System?

A POS system has the same ability to process credit or debit cards but usually comes with additional features and smarter functionalities. The role of a point-of-sale system is not simply to process cards. Instead, these machines are designed to help the merchant manage his/her business by offering full integrated features and tools.

Generally, most POS systems would offer –

  • Credit card processing
  • Receipt printing
  • Cash-drawer management, specifically designed for enhancing cash sales
  • Barcode scanning
  • Inventory system to help merchants track stocks and merchandise
  • Business reporting and real-time analytics
  • Employee time clocks

Businesses must choose their POS system based on their specific preferences and requirements. In short, the advanced features of a POS system enable merchants to manage their core business areas, and not just their sales.

A good example of a POS system would be Clover Station from the payment solutions provider First Data. This system accepts cash, all card types, and prints receipts. Additionally, modern POS machines also have the capability to track employee activity, inventory, and generate real-time analytical reports for merchants.

Some point-of-sale systems are best suitable for people owning supermarkets and retail stores. These are usually the industries in which merchants don’t usually accept payments for their consumers on-the-go, mostly because POS devices cannot be transported easily.

These types of POS machines come with EMV-chip and magnetic stripe readers, keypads, etc., which are similar to terminals. Other tools and features included in a POS system are printers, larger screens, and cash drawers.

Types of Credit Card Terminals

The three basic kinds of credit card machines include –

  • Traditional or Conventional Terminals: Traditional terminals usually come with a small display screen, a magnetic stripe reader, and a keypad. These devices are also known as physical terminals, and they help to save both time and money.
  • Virtual Terminals: These machines are best suitable for merchants who use the phone, internet, fax, and others, to conduct their day-to-day business operations. For these merchants or business owners, traditional credit card terminals are not the right solution. Some merchant account providers, in these cases, offer business owners a virtual terminal as well as software to help manage their everyday credit card transactions.
  • Wireless Credit Card Terminals: The wireless credit card machines are more beneficial for mobile businesses as they help to increase their efficiency. Further, merchants using these terminals can accept credit cards even from temporary locations. Besides, some wireless terminals also come with inbuilt printers for faster checkouts and transactions.

The best thing about these wireless credit card terminals is that they are small, reliable, and are quite simple and uncomplicated to use. However, one downside to these otherwise amazing devices is that they can become quite expensive at times, especially for those business owners who don’t require them much. Also, one can easily lose these terminals since they are carried around more frequently.

But whatever be your credit card terminal, you can never accept card payments without one.

What is the Right Solution for My Business?

While deciding whether to opt for a credit card machine or a POS system, the key factor to consider is which one is more advantageous and profitable for your business in the long run. Ask yourself questions like –

  • Where and how do you accept payments from your customers? Accepting credit card for your business can increase your sales by 40%
  • Which device is going to cater to your needs most efficiently and cost-effectively?
  • What are the additional features or services you would receive from your machine brand/manufacturer, and how is it going to help your business succeed?

As mentioned earlier, businesses accepting payments in one location, like a restaurant or a clothing store, would find a POS system more beneficial for them. However, companies or contractors who travel from client to client to make a sale, would prefer a credit card terminal, since they need to receive payments on-the-go.

To conclude, whichever solution you choose, make sure to check the key features it is offering. Look for some common features that almost every credit card processor or reader is providing.

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