Every business should strive to provide safe payment processing solutions. In an age where companies risk data breaches and other cyber threats, you must ensure that your customer data is as protected as possible. For this reason, you have to be confident the credit card reader apps you use to process payments are secure.
How do Credit Card Readers Work?
Credit card processing is standard across many industries. However, not many merchants know what’s going on behind the scenes. Learning how credit card readers work gives you an advantage when choosing secure products for your business. A credit card reader is a device that connects to a point of sale to facilitate transactions. It reads the details on a credit card and sends it to the bank and card network.
This process happens when a customer swipes, dips, or taps on the reader. The magnetic stripe or chip allows communication between the device and the card. This data is sent to the merchant’s bank, which contacts the issuing bank to authorize the payment. Once the issuer verifies the customer details and confirms the availability of funds, it approves or declines the transaction. If approved, the reply is transmitted to the reader before funds are withdrawn from the customer’s account to the merchant’s account.
Advantages of using Credit Card Reader Apps
So, you are researching credit card processing options and come across mPOS. Why should you consider apps to accept payments? The ease of use is a huge plus side. A small business doesn’t have to spend a lot on training workers to receive credit card transactions on mobile devices. These apps don’t have steep learning curves, making them particularly ideal for new business owners. If you run a mobile venture, you can accept cards effortlessly wherever you go. You only have to download the software on your phone or tablet. Thus, you can process payments in your pop-up restaurant, food truck, trade show, or outdoor market stall conveniently. This flexibility also favors buyers, which helps with customer retention.
Disadvantages of using Credit Card Reader Apps
Mobile credit card readers are not without their downsides. The biggest one to watch out for is the minimal support provided compared to legacy POS systems. Although most providers promise dedicated customer support, it’s not as comprehensive as you would expect. In payment processing, delays cost money, hence the need for optimum performance at all times. If an app stops working, then it might take a while before getting the necessary assistance. Another disadvantage is that smartphones and tablets can malfunction for any number of reasons. Also, mobile devices are easier to lose and get damaged than desktop setups.
How are Transactions Secured?
A reason credit card reader apps are growing in popularity is that they provide multiple security measures. Therefore, you can be confident customers are safe when paying with credit cards. Although no system is impervious to security threats, credit card readers reduce the risk of payment information through the solutions highlighted below.
Encryption
In credit card processing, customer data moves from one point to another before payment is complete. During this communication, third parties can intercept the information and use it as they please. Encryption prevents this. mPOS apps encrypt their platforms to protect data. Even if intercepted, the details are useless without a decryption key. Encryption ensures that only authorized parties access the data transmitted in card payments. Credit card processing equipment comes with end-to-end encryption, which not only offers layered security but also encodes the data. Encryption is standard on card reader apps.
Tokenization
Contactless payments, such as Apple Pay, Samsung Pay, and Android Pay, popularised tokenization. However, it existed long before that in e-commerce. Tokenisation is a technology that eliminates the need for a merchant to hold the card or bank account details. During credit card transactions, a string of random numbers, called a token, is generated to represent the bank account. The real customer details remain safe in a vault. Tokenization decreases the risk of data theft and other threats in the event a merchant suffers a data breach.
ЕMV
Credit cards used magstripe technology to store data. However, these cards are slowly being phased out and replaced with EMV technology, which is safer. The major card networks, including Visa, MasterCard, and American Express, developed and manage EMV. With this technology, credit cards use microchips for data storage. EMV is more advanced than magstripe because it runs several checks to ensure a card’s validity. Hence, it reduces the risk of fraud. The data in the chip is also dynamically encrypted. The shift to EMV has resulted in a significant drop in fraud, which makes chip credit card readers worth the investment.
Conclusion
The transition to credit card reader apps is partly due to the enhanced security they provide. As a business accepting credit cards, you can never take security too seriously. The three main technologies used to protect customers do a good job. Nonetheless, you can’t be too confident when setting up payment processing. Learn the different threats card transactions face and find the best safeguards. Secure payments are vital to business success.