If called upon to swipe a credit card, debit card, or gift card manually, you need to swipe the card correctly. The right way to swipe a card is to slide it through the slot with the strip on the back of your card facing left. However, there are several types of card readers and different ways to process a card transaction. .
United States polling indicates that 80% of buyers prefer using a card over cash. It’s statistically likely that you, the reader, have at least one credit or debit card. If that’s the case, you should know how these cards work.
Now, while magnetic stripes are becoming a thing of the past, you should still know how to use them properly. Even better is to understand what happens when you swipe the card through a machine and to know the card-payment alternatives that don’t require swiping. Keep reading to learn how card readers work with your credit and debit cards, how to correctly swipe your card, and how card payments today more often use processing methods that don’t involve card swiping at all.
Credit and debit card basics
If you are going to use cards for payment, you should know the difference between credit and debit cards. In case you need a refresher, read this section.
Credit card fundamentals
You use a credit card to pay for goods and services with money borrowed from a financial institution, usually a bank or credit union. Whenever cardholders use their credit cards to pay for things, this adds to their credit balances or the debt they owe to their card issuers.
Card users agree to pay back the money they borrow with interest. Typically, interest only begins accruing on a balance not paid in full within a month. The credit card agreement includes spending limits, interest rates, and annual fees. The amount of credit extended to you under this agreement is your credit line.
Technically speaking — Don’t confuse the credit line you get when granted a credit card with the separate financing option called “a line of credit.” The latter doesn’t require a card and is a different product entirely. Learn more by reading Line Of Credit vs. Credit Card: Which is Better?.Yes, you’re right, people do often call card credit lines “lines of credit,” but you might find it easier to keep things straight if you don’t do so yourself.
Use, don’t abuse, credit cards
Credit cards can be very beneficial. They are a great way to build your credit score by diversifying and adding to your credit history. Having a credit card is also a huge responsibility that many people abuse.
A good rule to set when opening a credit card is to never spend more than you can pay off immediately. In other words, don’t spend more than you earn. Credit cards make it easy to feel like you have unlimited money. For this reason, they require discipline.
Credit card types
There are several types of credit cards, but they all perform the same basic operations and apply the principles stated above. A few prominent types of credit card are these:
- A standard credit card opens a credit line from the bank to the user for making purchases, usually with no annual fees.
- A premium credit card includes bonuses and rewards such as travel points, cash back, and more.
- A charge card is a special type of credit card that has no preset spending limit but doesn’t carry over balances from month to month.
To choose the best card for you, shop around, examining the terms and options offered by various financial institutions.
The basics of debit cards
Debit cards differ from credit cards. When you make purchases or transfers with a debit card, you draw directly from funds in your checking account. Some prefer using only debit cards because they don’t want to accrue any credit card debt. (They may also believe debit cards have other advantages.) And debit cards often have fewer fees than credit cards.
Debit card types
Just as with credit cards, there are different types of debit cards you can choose from. Here are a few worth knowing about:
- Standard debit cards simply draw available money from your bank account when you make payments.
- Prepaid debit cards have a set amount of funds loaded onto them that allow people without bank accounts — for example, children — to make purchases up to that amount.
- Electronic benefits transfer (EBT) cards are government-issued debit cards that allow eligible individuals to use their benefits to make payments and purchases.
Prudent use of your debit card
Be careful when using a debit card. It’s important to track spending and account balances. Most banks deny purchases or charge overdraft fees if you spend more money than is available in your account.
How do card readers work?
Every credit and debit card has technology that allows it to share banking information with a card reader. Card readers are also called point of sale (POS) systems. There are a few ways that a credit or debit card user can share banking information stored on a card with a card reader.
How to let your card share your info
Depending on the type of card you carry and a vendor’s payment setup, you will need to do one of the following to share your financial information and complete your purchase:
- Insert the card’s chip (EMV)
- Tap the card for a contactless payment
- Make a contactless smartphone payment, with no physical card required
- Swipe the card’s magnetic stripe (magstripe) in the traditional way
- Manually type in the card number
Many cards have all of these technologies nowadays. When you share your card information via any of these methods, multiple transactions are executed behind the scenes in a matter of seconds.
Card payment processing behind the scenes
First, the customer presents a card at the point of sale. The card’s data moves into the electronic information system (EIS). Next, the card reader’s payment gateway securely verifies with the customer’s bank that the customer has available funds to complete the purchase. If so, the customer’s bank puts the funds on hold and marks the transaction as pending.
Then, the customer’s bank moves the money to the merchant’s bank account. With many card payments, the merchant will be charged transaction fees.
The final step is the settlement of funds. It can take several days for the transaction to be fully processed and deposited into the merchant’s account.
Every payment gateway follows the same general process. There may be variances in processing time and transfer procedures from card reader to card reader.
Types of card readers
Several types of card readers exist on the market today. The following are the main types of card readers.
Chip (EMV) card reader
EMV stands for “Europay, Visa, Mastercard,” the founding companies of the chip technology. Many cards now have a chip in addition to a magnetic strip. Similarly, most modern card machines accept payments via chip card.
EMV cards work when you insert the chip facing up into the card reader and leave it inserted until the transaction is completed and the machine tells you to withdraw it. Learn about smart chip technology and card tracking in this SuperMoney article.
Contactless payment has grown in popularity over the last few years. Mastercard observed an 1 billion increase in the number of contactless payments from 2020 to 2021.
Many card readers now have technology that allows card payments just by tapping. You can now make payments at most stores using your mobile phone or contactless payment card. It’s as simple as tapping the phone or card onto the part of the card machine that accepts contactless payment. Usually, this part is indicated by three curved lines that look like the Wi-Fi symbol.
Magstripe card reader
Magnetic stripe card readers have been around the longest out of any of these types of card readers. The user swipes the card through the card swipe machine, which reads card data from the magnetic strip on the card. Card users need to swipe a card correctly for their payment to go through.
How to swipe a card
Makers of card readers may be phasing out swipe machines due to the emergence of chips and contactless payments, but many vendors still use the older technology. You’ll likely be in a situation where a card reader doesn’t accept any other form of payment. Here’s how to swipe a card correctly.
How to swipe a debit card
Debit card transactions are simple as long as you know your identification number (PIN). To swipe a debit card, first, make sure the card reader is turned on. Insert the corner of your card into the swipe machine’s swipe terminal with the magnetic stripe toward the thicker side of the terminal. Swipe the card all the way through until it exits the terminal. You should swipe through at a swift and consistent speed.
Wait to make sure the machine reads your card properly. If you didn’t swipe correctly, it will ask you to try again. Make sure the magstripe is firmly pressed against the magnetic reader.
Most often, the card reader will ask for your debit card PIN. Type it in to authorize the purchase. As long as you have enough money in your account, you are good to go!
How to swipe a credit card
Unlike with your debit cards, you don’t need to have money in your account to make a payment with your credit card. As long as the purchase doesn’t exceed your credit limit, your transaction should go through without problems. Contact your credit card company with any issues or questions you may have.
As far as swiping your credit card goes, you know most of the steps already. Swiping a credit card is very similar to swiping a debit card. You won’t have to type in a PIN, but you may have to type in your billing zip code.
How to swipe a debit or credit card: recap
Here’s a quick review of the steps you just learned:
- Make sure the card reader is on
- Run the card swiftly all the way through the swipe terminal at a constant speed with the magnetic stripe facing the thicker side of the terminal
- Wait to see if the machine asks you to swipe the card again
- For debit card: enter your PIN upon request
- For credit card: enter your billing zip code if requested
Another way to swipe debit and credit cards
There is another way some card readers accept both credit and debit card swipes. These are commonly found at gas stations. You’ll have to insert your card into the credit card machine with the magnetic stripe facing in the direction indicated on the screen. Make sure you look closely and follow the directions.
When prompted by the machine, you’ll quickly remove the card, swiping the card against the magnetic stripe reader. Often at gas stations, you will then be prompted to type in your zip code.
How to swipe a gift card
Many gift cards have swiping abilities. Swiping a gift card can work much like swiping a debit card. Make sure the magnetic stripe is facing the correct way, then swipe the card completely through the swiping machine.
Some retailers accept gift cards differently. Often, the cashier will swipe the card or type the card information in for you, working with store’s own electronic information system. You can ask about this next time you need to use a gift card. Different merchants will have different preferences.
- Most people make purchases using a debit card or credit card. To make a payment, customers have to present their card to a card reader. The most common types of card readers take EMV chips, contactless payment, and magnetic stripes.
- Once a customer makes a payment through a card reader, several transactions happen in the background to verify the funds are available and then transfer them from customer to merchant.
- It’s important to know how to swipe a card properly. It’s a similar process for credit cards, debit cards, and gift cards. Make sure the magnetic stripe is facing the correct way. Press the card firmly against the reader and swipe it through swiftly and completely.
How do you manually swipe a credit card?
Manually swipe a credit card by first assessing the swipe machine to find out which way the magnetic stripe should face. It should face inward and toward the thicker side of the swipe terminal. Swipe the card all the way through at a consistent speed.
How can someone use your card without having it?
If you don’t have a physical card with you, you may be able to type card info in manually or use contactless payment on your smartphone. It’s a good idea to memorize your card information in case you need it when you don’t have your card handy. People who prioritize convenience also believe it’s a good idea to enable contactless payment on your phone in case you don’t have your card on you.
Do keep in mind, however, that the easier it is for you to use your card without having it physically with you, the easier it may be for someone else who acquires your card information to use it. Before you enable contactless payments on your phone, for instance, make sure you’ve well protected your phone against unwanted access, such as with a biometrically secured lock screen.
Can someone use my debit card without my PIN?
There are some ways you can get around the PIN requirement. Check out this article by SuperMoney to learn how. You should keep a record of your PIN in a secure location in case you forget it.
Earn cash every time you swipe your debit card
Are you aware it is possible to get a debit card that rewards you when you pay for something by swiping, inserting, or tapping your debit card? If you are thinking of opening a new debit card account, check out SuperMoney’s review of the Discover Cashback Debit Checking Account, which offers just such a card.
View Article Sources
- Credit or Debit Card Surcharges Statutes — National Conference of State Legislatures
- How Do Swipe Cards Work? — Hearst Newspapers’ Chron
- Mastercard New Payments Index: Consumer appetite for digital payments takes off — Mastercard
- Supplemental Nutrition Assistance Program (SNAP) Facts — Social Security Administration
- Swipe Fees (Interchange) — NACS
- Useful background articles from Shopify and from business finance, payment processing, personal finance, and tech sites — Various
- Can You Track a Debit Card? — SuperMoney
- Compare Credit Cards — SuperMoney
- Discover Cashback Debit Checking Account Review — SuperMoney
- How to Bypass a CVV Code — SuperMoney
- How to Get Money Off a Debit Card Without a PIN — SuperMoney
- Line Of Credit vs. Credit Card: Which is Better? — SuperMoney
- My Debit Card Chip Is Not Working — What To Do? — SuperMoney
- Surprising Things You Can Buy With EBT — SuperMoney
- What Are the Advantages of a Debit Card? — SuperMoney
- What is Swiping Scamming? — SuperMoney