How To Accept Credit Card Payments On Your Phone: The Complete Guide
A mobile credit card reader is a plug-in or peripheral device that allows merchants to accept credit card payments on their phones. Read this guide to learn more about mobile point of sale options.
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Expert Analyst & Reviewer
UPDATED
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Mobile credit card processing has been on the rise for some time now. With companies such as Square Payments taking the lead in North America, the use of mobile point of sale (mPOS) technology was already on the ascent. Then, COVID-19 arrived, further accelerating the trend and need for credit card readers that only need a cellphone.
It has quickly become the norm across the US to have your coffee/sandwich/cocktail order taken at the door (or window) of a place of business by an employee with a mobile credit card reader. If you’re reading this, you’re probably looking to accept credit cards on your phone or perhaps your tablet as well. So where do you start, and how do you decide which software/payment processor to choose?
Note, we’re not including iPad POS systems in this post, as they don’t work on smartphones and tend to be designed more for countertop register setups than for mobile use.
If that’s what you’re looking for, we recommend checking out our iPad POS reviews.
Table of Contents
- Why Accept Mobile Credit Card Payments?
- How Accepting Credit Cards On Your Mobile Device Makes Business Run Better
- What Is A Mobile Credit Card Reader?
- How To Accept Credit Card Payments Using Your Phone
- Accepting Credit Card Payments On Phone: The Bottom Line
- FAQ: How To Accept Mobile Payments On Your Phone
Why Accept Mobile Credit Card Payments?
Accepting credit card payments on a mobile device allows merchants to repurpose a common piece of hardware into a payment terminal without the need to buy expensive hardware. Further, these devices are easy to move around should you need to conduct business away from your typical POS installations. This can be particularly useful if you don’t want to handle cash.
Pros
- Accept non-cash payments without a bulky, expensive setup
- Increase sales by giving cashless customers a payment option
- Safer than carrying large amounts of cash around
- Easier recordkeeping
- Easy to setup
Cons
- Most interfaces are Bluetooth, so you may drain your battery quickly
- Mobile payments apps are generally more limited than terminals
- Potential wear and tear on a multi-purpose device
- May not be as time-efficient as POS terminal
How Accepting Credit Cards On Your Mobile Device Makes Business Run Better
Let’s take a closer look at how a mobile payment device can add value to your operations.
Artists & Craft Businesses
Do you sell your wares at conventions, art shows, and other pop-up events? You could be an artist, an author, a quilter/seamstress, or a jewelry maker, just to name a few. If you rely on local events rather than a storefront to sell your wares, a mobile POS system designed for low-volume businesses with no monthly fee is ideal for your business because it means you don’t need to pay for the software when you aren’t using it. You probably won’t need a lot of advanced features, but keep in mind that you can get pretty solid inventory management on a mobile system.
Direct Sales
If you’re in direct sales — that is, if you are an independent consultant who sells makeup products, clothing, candles, kitchen products, and the like — you almost certainly rely heavily on parties to hawk your wares, in addition to selling online or at pop-up events. Instead of trusting your customers to bring cash or having to wait and hope checks will clear, the ability to accept credit card payments with your phone on the spot can help ensure you get those last-minute impulse buys. A mobile POS with intermediate to advanced inventory, discounting, and flexible tax settings will make a world of difference.
Food Trucks & Farmers Markets
Having a small POS system is a must in a cramped food truck.
Whether you want a tablet stand with a small footprint or you opt just for a smartphone and mobile reader, the point is that a mobile system is undoubtedly the right choice. Being able to send digital receipts (SMS or email) means you don’t have to bother with a receipt printer taking up space — and you don’t have to worry about connecting it to the internet either.
Restaurants & Retailers
Even established restaurants have adopted mPOS apps. A handheld device with the entire menu loaded on it can make taking orders more reliable, especially if, for example, the POS prompts you to input preferences for sides and toppings rather than assuming the default. Even casual restaurants where you might place an order at the counter are using mobile devices, with roaming servers who can stop by a table and place additional orders rather than requiring customers to get up and go back to the counter.
And there’s another big advantage to having card readers mobile and available to use on phones: the ability to process credit cards right at the table. Some restaurant-focused mobile POS systems now have a feature that lets tablets function as self-service kiosks where customers can place their orders and pay their checks at the table without a server present.
What Is A Mobile Credit Card Reader?
A mobile credit card reader is a plug-in or peripheral device that allows merchants to accept credit card payments on their phones. There are three general types of credit card readers for mobile phones, though many models will incorporate two, or even all three of the following transaction methods.
Credit Card Swipers
A credit card swiper accepts magnetic stripe (magstripe) payments — the type of payment credit cards were originally designed for. While they are convenient and possess a smaller physical profile compared to other types of readers, they are considered obsolete. Of the three methods of accepting payments, magstripe payments are by far the least secure. What’s more, due to regulations enacted in 2015, if a merchant only has a magstripe reader and a customer uses a stolen or fraudulent card with both a magstripe and a chip, the merchant is responsible for the loss on the purchase. To shift the liability back to the credit card companies, the merchant needs to have an EMV card reader.
EMV Card Readers
EMV card readers are colloquially known as chip card readers. With EMV technology, your payment information is stored digitally on a square chip embedded in your card. It’s designed to be much more secure against fraud than magstripe technology. In fact, it’s the reason EMV technology was developed in the first place. Anybody doing business in the modern world will want to be able to accept EMV payments to reduce their exposure to chargebacks.
NFC Card Readers
NFC stands for Near Field Communication, and it refers to wireless payment technology that transmits payment information at close range. NFC payments are sometimes referred to as a mobile wallet or digital wallet payments. Customers use mobile wallet payment apps, such as Apple Pay, Google Pay, and Venmo, to transmit their payment information via either a smartphone app or an NFC-enabled credit card. Unlike magstripe technology, it’s highly secure. However, contactless NFC technology is not yet as widely used as EMV and magstripe technology, so if you choose to accept NFC payments, you’ll want to be able to accept other types as well. Thankfully, most mobile card readers that can accept contactless payments are also able to accept chip (EMV) and/or swiped (magstripe) payments.
Where Do You Get A Mobile Card Reader?
There are two main ways to get a mobile card reader:
- Through a third-party processor. You can get an inexpensive card reader sent to you upon signing up with a processor such as Square or PayPal. In fact, you may be able to get one for free as part of a promotional offer. This is probably the easiest route to take for merchants just launching their business.
- Through your existing merchant account provider. Established businesses find that the easiest route to using a mobile card reader is to add a mobile app to their existing setup by contacting their merchant account provider and inquiring about their options. With a merchant account, you’re more likely to encounter software, subscription, and/or service fees every month.
Check out our Best Credit Card Readers For Small Businesses feature for a look at card reader models.
How To Accept Credit Card Payments Using Your Phone
Here’s how to accept payments on a mobile phone:
- Open an account with a payment processor and get a mobile card reader.
- Open your mobile POS app on your device.
- Connect your device to your reader or use a payment link or QR code
- Swipe, dip, or tap the customer’s presented card or device.
- The customer leaves optional tips and opts in or out of digital receipts.
Open An Account With A Payment Processor And Get A Mobile Card Reader
There’s no way around it: if you want to accept credit card payments on your mobile device, you’ll need an account with a payment processor. We touched on how to get a mobile reader above. While it is possible to process a payment without a reader by keying it in, most payment processors charge higher rates for this method.
Open Your Mobile POS App On Your Device
Most mobile POS services utilize an app or web app to process transactions. Make sure it’s opened, and you’re logged in.
Connect Your Device To Your Reader Or Use A Payment Link Or QR Code
Your card reader will need to be synced up to your device in order to accept the transaction. You probably also want to make sure you’re connected to the internet, although many apps are able to process in “offline mode” in a pinch. Alternatively, you can bypass the need for a reader by using payment links or QR codes. These will process the payment as a card-not-present transaction, which is generally more costly. If you take this route, you can skip the next step.
Swipe, Dip, Or Tap The Customer’s Presented Card Or Device
This is where the magic happens. If all goes well, your reader should capture the customer’s payment information and process the transaction.
The Customer Leaves Optional Tips And Opts In Or Out Of Digital Receipts
If applicable, the customer can leave a tip and select how they’d like to receive their receipt, if at all. The customer may also need to sign for the transaction using the touch screen.
Accepting Credit Card Payments On Phone: The Bottom Line
Who wants to deal with paper checks these days? If your business has you on the go with any frequency, an mPOS app and mobile card reader offer significant benefits. For small businesses that are just starting and may not be pulling in large volumes, some providers have no monthly fees, no payment processing minimums, and won’t subject you to extensive underwriting. Furthermore, even large, established businesses doing a high volume can implement mobile POS systems that will scale with them, affording both more flexibility and more mobility.
For more on choosing the right smartphone-friendly mPOS option for your business, check out the following resources!
- 5 Best Mobile POS Apps
- How Do You Find The Best Credit Card Reader For Small Business? Try These 7 Options
- Mobile Processing Comparison Chart
- A Cashless Future Is Coming. Is Your Small Business Ready?
Go through our comprehensive payment processing guide to learn the nuances of the industry and get your business up and running.
Have questions about how to take credit card payments on your phone? Want to know more about how to accept mobile credit card payments? Drop us a comment and let us know.
FAQ: How To Accept Mobile Payments On Your Phone
Chris Motola
Expert Analyst & Reviewer at Merchant Maverick
An expert in personal and business loans and financial health, Chris Motola has been writing about small business finance and payments for over 5 years. He has been cited in various industry publications, including Forbes Advisor, GoBankingRates, and Medium. Chris is a graduate of the University of Central Florida.
View Chris Motola's professional experience on LinkedIn.
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We have recently found Merchant Maverick and have utilized it extensively in the process of trying to decide on not only a POS system for our hybrid business (service and renovation/retail store) but also a separate mobile credit card processing capability for curbside service. We are a Quickbooks desktop user and ideally, I would like to not get any more involved with Intuit than I already am. Unfortunately, after a lot of examination, it appears that none of the main players in the POS world really do a good job of integrating with Quickbooks. Sure, you can have them work together, but in the end, they are designed to be a stand alone suite, and syncing sales data in detail to Quickbooks is left to third party app developers who really don’t make anything capable of processing or syncing to a 7000+ database of customers. Unless I’m wrong, and I’d love to be, that leaves us with the Quickbooks POS. And even that doesn’t necessarily like to play along with Desktop seamlessly. What we are now trying to find is a mobile credit card reader that will simply be an extension of our existing merchant account (Fiserv with PNC Bank). Sounds simple. Except, the largest credit card processor in the country hasn’t come up with such a device, even after 11 months of a pandemic. Their options are limited to Clover, Clover and Clover, which to my knowledge requires setting up a separate processing account with associated monthly fees and rates. Do you have any recommendations for credit card processing where in addition to our traditional indoor unit, I can simply have a hand held card reader (dip, tap, swipe) that I can take out curbside to only take payments? I don’t need it to be a POS unit. Thank you.
This comment refers to an earlier version of this post and may be outdated.
Hi Mike!
You could contact Dharma and see if they can help. They have an mPOS (MX Merchant Express) that doesn’t use Clover, and they should be able to integrate with QB. Since they’re a Fiserv reseller, it should be easier to get out of the merchant’s current contract without getting hit with a big ETF (Early Termination Fee). If you’d prefer to stick with PNC, you could probably get a Clover Go or Clover Flex setup from PNC. If you are signed up for our newsletter promos, you will receive a Clover discount later this week. Good luck!
This comment refers to an earlier version of this post and may be outdated.
We are a consulting service company. We do not have a brick and motor office. We make all of our sales on the phone with clients for over 20 years. We only take payments for our services by bank wire transfers, bank deposits to our account or bank cashiers checks. We would like to accept credit cards for orders made over the phone.
What would this credit card process be called?
What company does offer accepting credit cards for this type of sold services?
This comment refers to an earlier version of this post and may be outdated.
Hi Stasha,
We have a post on Mail Order/Telephone Order (aka “MOTO”) transactions that details our top six choices of MOTO processors and the types of businesses they support (including high risk, i.e., consulting).
This comment refers to an earlier version of this post and may be outdated.
I have been an avid user of Square for the past 7 years and have had nothing but great things to say about it. I was just looking around to see what else is out there. Someone mentioned to me a site where the customer pays the fees and all the merchant pays is like $20 month. I have yet to find the site to review it, but this to me sounds like a great opportunity… yet may be too good to be true …
This comment refers to an earlier version of this post and may be outdated.
Thank you, very informative. One question though, you mentioned PayPal in your article but did not include it in your comparison chart. Any reason why not? That is one of two that i’m considering. Thanks!
This comment refers to an earlier version of this post and may be outdated.
Hi Chris,
Our comparison charts are limited to our top 5 choices, and Paypal didn’t quite make the cut. It’s still a great choice for many businesses though!
This comment refers to an earlier version of this post and may be outdated.
Question….
How much “data” are we likely to use up on our mobile phone monthly if we process 100 credit card transactions per month? Is it significant? We have a small plan to start with (500mg /month) but do little else other than e-mail.
This comment refers to an earlier version of this post and may be outdated.
Hi, Peter!
That’s a good question. According to Square, the average card transaction is about 10kb of data, and logging into the app uses about 8kb of data. As far as I have read, that’s typical of any mPOS app. There’s additional data usage for things like sending receipts or failed transactions, but all of it is quite small when you consider that 1 megabyte = 1000 kilobytes.
The list is available here: https://squareup.com/help/us/en/article/4963-data-plans-and-sms-policy
Square also says you shouldn’t need more than a basic data plan. However, if you use email, that will also eat up data, and I can’t give you any idea of how much. And exact data usage rates will depend on which processor you choose (some may use more data than others). However, you shouldn’t have to worry about a mobile processing app eating up all your data, so long as you monitor your usage overall. You can also take advantage of wi-fi where it is available, which will cut down on your data usage.
Hope that helps!
This comment refers to an earlier version of this post and may be outdated.