A payment terminal is a machine that captures credit and debit card data, then sends it to the merchant services provider or bank for authorization. Terminals may be standalone devices, or they can be part of a point of sale (POS) system that also captures inventory and records employee hours. Terminals vary in capability and performance, with differences largely tied to software potential.

The payment gateway encrypts the transactional data before sending it to the card verification center, where a decision is made whether to authorize or decline based on available funds and other factors. It then communicates the outcome back to the merchant and the customer, and transmits the approved data to the terminal or virtual terminal.

Newer payment terminals—such as the Ingenico iWL 250 or Newland N910—support most modern payment methods including chip cards, contactless payments like Google Pay and Apple Pay, sound wave and QR code payments, and magnetic swipe. These systems are typically connected to a POS and may support recurring payments, too.

Businesses can either purchase or lease POS terminals, with buying generally being the better option. If you do decide to lease, make sure the company is not trying to force you into a long-term contract and that the monthly payments don’t end up costing more than a purchase would have over the life of the equipment.  payment terminal