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Merchant services: Finding the right chip-and-PIN machine, at the right price

Reading time: 9 mins

Although these three names are often used interchangeably, “chip-and-PIN” machines are in fact specific types of “PDQ machines” or “credit card terminals”. Indeed, the very name indicates that these machines only deal with payments made using “smartcards”, that is, with a chip, and requiring the cardholder to key in his pin.

The simplicity of use makes it even more interesting to know how these devices work and what different types of machines are now on the market.

But what really matters for the retailer or small business owner is to know what kind of machine is best for his needs and how much it will cost.

How chip-and-PIN machines work

Because of how they work, chip-and-PIN machines offer secure credit and debit card payments in just seconds.

This safety and ease of use can be brought anywhere to make transaction on the go with wireless and mobile terminals.

How chip-and-PIN card machines process card payments

Chip-and-PIN payments are rather self-explanatory, as they are based on the device reading the chip of the card, and the user entering is PIN to allow payment. Basically every shopper knows how to use a chip-and-PIN machine.

But this doesn’t explain all that goes on between the moment the chip is read and the transaction accepted – nor does it account for when no PIN is needed, as is the case with contactless payments.

The chip-and-PIN payment cycle involves, in the following order:

Keying in the PIN,

Sending the encrypted transaction information to the merchant account,

-  Requesting an authorization from the credit card network,

-  Another request for authorisation from the credit card network to the customer’s bank,

-  After the transaction has been authorised, a registration by the till or Point of Sale system ,

-  And the transferring of funds from the retailer’s merchant account to his business account, which takes about 3 to 5 days generally.

All this cycle makes chip-and-PIN transactions much more secure than “swipe” transaction, which require swiping the magnetic stripe of the credit card and a signature of the cardholder.

Types of chip-and-PIN machines

PDQ terminals can be wired, wireless or mobile:

Wired or countertop terminals are physically connected by cable to the till or point of sale system. Therefore, they don’t need to be standalone machines and can have the keypad, display, card reader and printer all separated. They are fine for most shops where customers normally pay at the counter and represent the cheapest available card terminals.

Wireless terminals are made to be used in the 30 to 100-metre radius around their base, which in turn is physically connected to the till. The most frequently used connectivity is Bluetooth or Wifi, the latter providing slightly better ranges. This type of machine is usually a standalone terminal, with printer, keypad, reader and display all packed in a single device. As they typically spend more time on their base than being used away from it, battery life is not so much of an issue.

Mobile terminals are also standalone devices, which look remarkably similar to wireless machines, save for the fact that they also include a built-in wireless modem. This enables the devices to connect to the servers using mobile phone signals, and therefore, to accept transactions nearly everywhere. Most models enjoy a battery life covering several business days.

Chip and PIN machine

Calculating the total cost of a chip-and-PIN solutions

Chip-and-PIN machine prices greatly differ depending on the machine type or model. But it’s important for retailers and small business owners to know that acquiring a PDQ terminal isn’t the only thing needed to start accepting card payments. The hardware, services and software part of the card payment solution make it even more important to carefully consider the two available options of renting or buying the machine.

Chip-and-PIN machine prices

Credit card terminal prices, when the machine is purchased, tend to become more and more accessible.

For instance – and we’re only mentioning new hardware here, not refurbished devices:

-  Simple, yet all-inclusive standalone wired terminals may sell for as little £150 or even less than £100 if there’s no included printer,

Bluetooth standalone terminals with printers from a reputable brand and contactless payment capability usually cost from £300 to £450,

Wifi terminals are more likely to start selling at around £500.

Mobile chip-and-PIN machine prices are intriguing because they can be either the highest or lowest:

“Traditional” 3G chip-and-PIN standalone machines with built in modem usually start at about £600,

Newer mobile machines, which are usually in fact just card readers or a combination of a reader and PIN pad, from the likes of iZettle, PayPal or SumUp, cost between £19 and £69. But of course, that doesn’t include the smartphone or printer, and they only work with the provider’s software.

Service fees and other costs

The price of the machine itself is certainly not the only amount to be considered when budgeting a working card payment solution.

Financial services fees include:

Setup and registration fees,

-  Termination fees,

Monthly fees,

Possible minimum service fees,

-  And the dreaded transaction fees.

These transaction fees may be flat fees, at a few pence per transaction, percentage fees, or both.

Percentage fees (usually 1.6 to 5%) are based on a number of factors such as:

Business profile (some businesses are considered riskier than others)

Card transaction volume (the highest volume, the lowest the fees),

-  Card transaction price,

-  Type of payment used (card not present payments will be more expensive),

Type of card used (foreign cards or Amex charge more).

The diversity of these prices and variables makes it necessary to request several quotes from chip-and-PIN machine suppliers .

Also, other equipment might be needed such as:

Terminal stand,

Paper rolls for the receipt printer,

-  As well as ink,

-  Electronic Point of Sale or till,

-        ePOS software .

Buying or renting a chip-and-PIN machine?

Getting all this equipment together and paying these fees might be quite complicated and looks quite costly.

This is why many retailers, especially small businesses, prefer renting their card machine. However, buying a chip-and-PIN machine also has distinct benefits.

Renting the card terminal means:

-  Almost zero upfront cost,

Service and maintenance are included,

-  Financial services and  merchant services are often also included,

-  Possible very short term contracts for exceptional needs,

-  Device replacement with newer models,

-  Customer support covering the whole card payment cycle,

-  But it also means higher costs in the long run, high contract fees or possibly termination fees, and all the trouble related to not owning the device or being able to customize the solution.

On the other hand, buying the machine allows:

Lower costs in the medium to long run,

-  Freedom from contracts,

Freedom of integration,

-  But devices quickly go out of date and may be insufficiently supported by the provider after the guarantee period is over.

Top chip-and-PIN machine providers

Regular business banks are no longer the sole type of providers of credit card terminals. In a more and more crowded market, machines are now also sold, or rented out, by hardware manufacturers directly, by pure players in merchant services, or by integrated payment and card solution providers.

Hardware manufacturers

If the plan is set on buying the chip-and-PIN machine outright, business managers may directly evaluate models by actual hardware manufacturers.

The market is currently quite narrow, with two leading providers globally and one extra company starting to make inroads in the top positions:

Ingenico is one of the world’s leading chip-and-PIN terminals manufacturers. Their range of models of all types is impressive, even more so as the company keeps adding devices made by competitors as Ingenico keeps absorbing them, like Hypercom.

Verifone is in the same league as Ingenico in global markets, providing an even more complete range of all kinds of credit card terminals.

PAX Technology is relatively new in the UK’s chip-and-PIN machine market, but this Chinese company is increasingly targeting the positions of Ingenico and Verifone by offering aggressively priced card machines.

Financial services providers

Financial services providers usually do not design and manufacture the hardware but commercialise the majority of card machines in hardware and financial services packages.

Traditional, high-street banks are the most represented example of such providers. But pure players have appeared, focusing exclusively on merchant services.

These operate through mail, phone or online orders and try to offer more competitive rates than traditional banks:

123 Send is a card payment processing provider and one of the most trusted in the UK. They specialise in mobile chip & PIN machines and portable payment solutions for events and small businesses, although they supply a large range of excellent quality credit card terminals. They have a strong record in good customer service.

First Data is a global merchant solutions provider. It offers an impressive range of simple and affordable chip-and-PIN solutions, whether face-to-face, telephone or online processing is needed.

Sage Pay, originally a software publisher, offers a whole host of merchant processing services, including low fee merchant accounts, accounting software, PDQ machines, electronic till systems and an easy to use payment gateway.

Integrated payment and card solutions providers

Finally, a third category has appeared with pure players in merchant services who also produce and provide their own credit card terminals:

WorldPay is the longest established provider of this kind. As one of UK’s largest card processing companies, it provides a whole range of merchant services, but also Worlpday machines which it produces itself. Worldpay specialises in optimised chip-and-PIN solutions for small businesses and has a wealth of experience to draw on.

iZettle represents a newer subcategory of providers, focusing on mobile chip-and-PIN solutions. Their credit card terminals are very small - actually they’re usually just mere card readers - as connected mobile phones or tablets are used as point of sale systems. These mobile phones or tablets provide the needed display or even sometimes keypad, and the connection to an external printer. This also helps bring costs low, so low that their card machines are exclusively sold, not rented out. They provide the full merchant services suite, which can work for face-to-face, online or on-the-phone payments.

SumUp is another provider belonging in the same subcategory, as are


Square, or

PayPal Here.

If you’re looking for a chip and pin machine for your business, we recommend  comparing quotes from several suppliers to choose the best deal.

More information on Merchant services

What are the requirements for using a Chip and PIN machine?What is a card reader and how does it work?How long does a PDQ terminal last?