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What Are the Different Kinds of Credit Card Machines?

Featured image by Engin Akyurt from Pixabay 

There are a number of different kinds of credit card machines that accept various payment types. The most basic credit card machines accept swipe cards, an older technology that is less secure.

Chip cards, which you insert into the machine, are more secure. The encryption they use is stronger than that used to secure the payment information on the cards with the magnetic stripe.

The most recent innovation is near field communication (NFC) machines. These are contactless payment terminals that accept payments using electromagnetic radio fields. Many people believed they were the safest. However, a recently exposed flaw puts some of their safety measures into question.

How Do Swipe Credit Card Machines Work?

The swipe card reader works by reading the data that is hidden in the black stripe. The black stripe essentially makes the numbers and bank information on the card machine readable.

The issue with these machines is they aren’t encrypted. Therefore, if a hacker were to hack your payment terminal they could steal all the stripe card numbers and then use them for fraudulent activities. This is an issue for you as a business, as you can be liable for any breaches.


How Do Chip-and-Dip (EMV) Machines Work?

EMV, which stands for Europay, Mastercard and Visa, the founders of this chip technology, works similarly to a swipe reader. The machine reads payment information from the card and charges your bank which takes the money out of your account.

The biggest difference is EMV machines work with encrypted data on the cards. The cards use an ever-changing set of numbers that must be encrypted to be charged. The credit card machine at the time of purchase does this.

The benefit for your business is they are much harder to hack than swipe machines. In order to effectively hack an EMV machine the hacker would likely need to take control of the device physically. The equipment to hack them is also much more expensive than the equipment a hacker would need to hack a swipe card machine. They are hackable, but far less so than the swipe machine.

How Do NFC Credit Card Machines Work?

NFC (near field communication) credit card machines typically accept EMV type cards, too. The way NFC works is the contactless card or device sends electromagnetic radio waves with payment data inside. They only work when in very close contact so it’s never a worry it will pick up someone else’s device.

Until recently many people considered them the safest devices. However, a recently discovered security flaw allows hackers to mimic those radio waves. The hack allows the hacker to steal card data or change the value of a transaction from say $50 to $1, but it will still appear to be $50 on the machine. Therefore, you might not notice until later.

The credit card machines affected by this hack are ID Tech, Ingenico, Verifone, Crane Payment Innovations, BBPOS, and Nexgo. So if you happen to own one of these machines or you are thinking about it make sure to install the new software that will update these issues. This hack is one of the more alarming ones for business because hackers (in this case using an Android phone they wave over the machine) can change the transaction amounts.


The Bottom Line

No credit card machine is totally hack proof, unfortunately. But if you’re looking at upgrading or buying a credit card machine your best bet is either an EMV or a newer NFC machine. If it’s from a vendor that was affected by a recent hacking incident, make sure they have upgraded the machine so it’s no longer vulnerable to this kind of attack. There’s an exhaustive list of credit card machines on Clara.

About the Author

Alex Beck is the founder of Clara, a fintech comparison site to help people find and compare the best new finance products.