Vending Credit Card Readers 101

An Overview

First you need to pick a brand card reader system. (Look below to see the brands and information about them). Find a company that offers the features and functionality that is important to you and fits your goals best. When setting up an account they will setup merchant account for you to receive the revenue generated by your credit card readers. It is ideal that you have an business entity formed already (LLC or Sole Prop), and EIN and a business bank account setup before opening an account with a credit card service provider. 

Each credit card reader costs roughly $350 each. This is a one time cost. This will include the reader, an antenna and the cables required to plug it into your machine. These readers operate on cellular signal; so order the version that works best in your area (in the US it’s typically AT&T or Verizon). If you need to place a machine somewhere where cellular signal is not available, there are work arounds available.

cMonthly costs can range depending on the provider you choose (see below). The typical monthly cost ranges between $7-15 a month. This covers the cellular service to the reader, the terminal communication costs, and online reporting tools. 

Lastly, you have transactional fees. If you are familiar with how being a credit card merchant works, some of this may be familiar. A standard brick and mortar shop that accepts your credit card payment will pay anywhere from 1-4% plus a transaction fee of 10-30 cents. This is where vending credit cards operates much differently. The providers instead charge a flat 5.95% of your credit card transactions. 

Here’s an example of a $2 transaction using the traditional method: $2 product – 2% fee (4 cents) + 30c transaction fee = $1.66 after credit card fees.

Here’s an example using the common vending transaction method: $2 product – 5.95% fee (11.9 cents) = $1.88 after credit card fees.

As you can see with the flat percentage method, you keep much more money than you would using the traditional credit card processing costs.

One way you can offset this cost is my instituting a set transaction fee for credit card transactions. This is fee is most commonly 10 cents. It would offset all or most of your credit card processing fees and allow you to keep more profit. One important thing to keep in mind if you do put this fee process in place. You are required to put signage on the machine stating this. Otherwise, it will lead to chargebacks and/or very unhappy customers that they were charged more than they were expecting to pay for the item.

Installation of the card readers is typically a pretty easy process and can be done in about 30-45 minutes with the right tools. Make sure to power down your machine before unhooking anything inside the machine.