How To Accept Credit Card Payments On Your Phone: The Complete Guide To Mobile Credit Card Readers

Right this moment, countless business owners share the same pressing concern: “I need to know how to accept credit card payments on my phone.”

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.

In the wake of the devastating pandemic, 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. As businesses scramble to adapt to our new shared reality, mobile POS systems are in demand as never before.

If you’re reading this, you’re probably looking to accept credit card reader for phone or perhaps your tablet as well. So where do you start, and how do you decide which software/payment processor to choose?

If you want a highly flexible POS that will run on a smartphone, read on! We’ll talk about software features as well as mobile credit card readers,  and then we’ll discuss some of the best mPOS options currently available in the US.

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.

Why Accepting Credit Cards On Your Phone Will Make Your Business Run Better

You may have a specific image in your head of who uses mobile processing apps and mobile credit card readers to accept payments. And you’re probably right — but whoever you’re thinking of, they’re not the only ones who rely on that technology. You can now find mobile POS systems in almost any industry that does in-person retail sales. The COVID-19 pandemic and accompanying social distancing orders have even led to mobile card readers popping up in businesses that normally process their transactions through a stationary system.

Let’s take a look at how different types of businesses can make use of mobile POS systems.

Using a Cell Phone Credit Card Reader For Arts & Crafts

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.

Mobile Phone Credit Card Readers & 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.

Adding A Credit Card Reader For Phones For 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.

Food trucks are far from the only food-related businesses that rely on smartphones and tablets. While I’ve encountered vendors at farmers’ markets who only take cash, most of them have a mobile POS to accept card payments these days. A mobile POS system with multiple user logins is definitely an advantage if you have a team that sells at several different weekend markets, too.

Restaurants Can Use A Smartphone Credit Card Reader, Too

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. There’s no more need to walk away with a customer’s card when the server can simply swipe it at the table and hand it back. 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.

Additionally, coronavirus concerns make mPOS systems all the more useful in the restaurant industry, especially as take-out ordering and having customers use a credit card reader by the door/outside/at a walk-up window becomes the norm.

Phone Credit Card Readers For Field Service & Mobile Businesses

If you don’t have a brick-and-mortar office or base of operation where customers visit you, having a mobile app and credit card reader for phone use is essential. Being able to accept payment on-site means you get paid faster than if you were to wait on an invoice or check. Plus, it gives you a more professional image as well as greater credibility.

Just some of the businesses that could benefit from being able to accept payment via smartphone or tablet include carpet cleaners, plumbers, lawn care, mobile dog groomers, exterminators, personal trainers, hairstylists, and makeup artists, web designers, and many more. I even know a massage therapist who sets up her massage chair in the game room of a local game and hobby store one night a week, and she uses a mobile POS to take payments.

Retailers & Credit Card Readers For Smartphones

Even businesses that do have brick-and-mortar shops are finding it advantageous to use mPOS systems with card readers. A smartphone or tablet with a card reader can be used for line busting or even allow customers to complete their purchases right on the sales floor rather than having to find a register.

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.

Connection Types

Square’s original iconic white magstripe card reader — the first mobile card reader in widespread use — was powered by simply connecting the device to the headphone jack on your smartphone. You can still use your phone’s headphone jack (assuming your phone has one) to power this device, but modern credit card readers can now be powered by either a Lightning connector or by a Bluetooth connection, depending on the reader you choose.

Essentially, one connection type is as good as another, though headphone jack connectors are the least future-proof since modern iPhones (and even Android devices like the Samsung Note) don’t even have headphone jacks. Bluetooth connections save you the trouble of worrying about wires, but they can occasionally disconnect and will use up battery life, so you may prefer to use a direct connection.

Where Do You Get A Mobile Card Reader?

You can get a mobile card reader in a few different ways. 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.

Companies like Square that tend to cater to low-volume businesses and offer flat-rate pricing are usually third-party processors. Since many of their clients aren’t doing sales volumes in amounts large enough to justify their own merchant accounts, third-party processors aggregate all of their customers into giant merchant accounts that they then deduct fees from.

Meanwhile, established businesses will either already have a merchant account or will want to consider having their own as they’re considerably more stable and less prone to account holds and freezes. 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. And because most merchant account providers require you to sign a contract, some will charge you an early termination fee (ETF) if you try to drop your provider before your contract term ends. If you decide to sign up for a merchant account, we recommend finding a provider that won’t impose an ETF on you.

Ultimately, regardless of your business situation, it’s up to you to decide what kind of processor you want to work with. While yes, many merchant accounts are targeted at established, higher-volume businesses, that’s no longer exclusively the case.

How Much Does It Cost To Accept Credit Cards Using A Phone?

Generally speaking, most payment processors do not charge a fee specifically for using a mobile POS. In other words, your transactions will cost exactly as much as they would if you were using a stationary POS. The pricing systems you’re likely to encounter are:

• Flat-rate pricing: Most payment processors that specialize in low-volume transactions will use flat-rate pricing. This means that all transactions made through a particular payment method (POS, eCommerce, or virtual terminal) will be processed at the exact same rate regardless of interchange fees. While not the cheapest per transaction, flat-rate pricing is usually all-inclusive. You won’t have monthly fees unless you’re signing up for premium features.
• Interchange-plus pricing: The favorite pricing scheme with the Merchant Maverick team. Interchange-plus pricing separates the fees charged by the card company from those charged by your processor, making it more transparent. That said, interchange-plus pricing often isn’t available or the best fit for very low-volume businesses.
• Tiered pricing: Our least favorite payment scheme. Tiered pricing has multiple potential transaction costs, usually based on unclear criteria. Our big beef with it is that the lowest tiered price is usually what’s advertised even if only a small percentage of transactions qualify for it. Avoid if possible, which it may not be if you’re in a high-risk industry.
• Subscription/wholesale pricing: You probably won’t encounter this if you’re just running a few transactions on your mobile device, but it effectively shifts some of your payment processor costs from per transaction to monthly billing. It can be a great deal for high-volume businesses.

How To Accept Credit Card Payments Using Your Phone

Using your mobile credit card reader for a transaction will look something like this (once you’ve set up your account):

1. Open your mobile POS app on your device. Most mobile POS services utilize an app or web-app to process transactions.
2. Make sure necessary hardware is physically or wirelessly connected. 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.
3. 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.
4. The customer leaves optional tips and opts in or out of digital receipts. The customer may also sign for the transaction.
5. The transaction is complete. Pretty straightforward, no?

Other Concerns For Using A Phone Credit Card Reader

As you might expect, mobile POS payments have become a fast-growing niche that’s developing its own shortcuts and nomenclature. Let’s take a look at a few common points of confusion:

• Funding times. If processing is getting more convenient, how about getting access to the money from your transaction. For the most part, card transactions are still pretty slow, taking an average of 3 to 5 days to move from POS to your bank account. That said, a few processors like Square and PayPal do make funds immediately available for a fee.
• Receipts. If you have a mobile POS, you probably aren’t hauling a printer around with you. That means your receipts, and those offered to your customers, will be digital. These can usually be sent to their phone number as a text, or to their email. Do not send a customer’s receipt to yourself. Your app should be keeping track of transactions for you.
• Text-to-pay/pay links/QR code payments. These don’t represent a mobile POS system, but rather an alternative to it. Essentially, a customer’s card is stored on a payment system and used to pay transactions to merchants who subscribe to the system. They’re generally considered more secure than most card not present transactions because the customer isn’t manually entering their card information on an eCommerce site. By comparison, mobile POS transactions are considered card-present transactions. Card present transactions have a lower cost to the merchant than card-not-present transactions.

How To Accept Credit Payments On My Phone: The Quick FAQ

How To Choose The Right Credit Card Reader For Your Business

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.