Innovations and Payment Systems

Retailers cash in on booming mobile card reader adoption


Mobile card readers are a game-changer for former cash-only merchants

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

Retailers cash in on booming mobile card reader adoption Hero Images/Hero Images/Getty Images

Frustration, not necessity, might be the true mother of invention. That’s what mobile card processer Square designer and former chairman Jim McKelvey reportedly felt when he lost out on a $2,000 sale of his glass faucets because he couldn’t accept credit cards.

After all, few people carry that much money with them, and may not even have it in their checking accounts. McKelvey and Twitter co-founder, Jack Dorsey, joined together to fix the problem with the invention of the first mobile card reader. With Square, sellers never have to say, “Sorry, cash or check only,” to would-be buyers again.

That was seven years ago. Today, mobile card readers are both varied and ubiquitous. Everyone from street musicians to Zumba instructors use them to take plastic as payment. Demand is so strong that, according to a 2016 Research and Markets report, market growth for these products is projected to increase by nearly 70 percent by 2020.

Here’s how mobile card readers are helping merchants big and small cash in.

The basics of mobile card readers
A person needn’t be a tech wizard to use a mobile card reader. It’s as simple as ordering the hardware, registering and opening an online account, then downloading the app to install the software on a phone or tablet.

Virtually anyone can obtain a reader, from individuals wanting to maximize cookie sales at a school fundraiser to established business owners. There are some notable exclusions, however. Square, for example, publishes a comprehensive list of prohibited goods and services, which includes processing funds for betting, drug paraphernalia, firearms, and a wide array of financial services, such as collection agencies and bankruptcy attorneys.

Mobile merchants testify to boosted sales
In-demand New York personal stylist Bridgette Raes is often on site giving the fashion-challenged advice on what to wear. “I don’t have an office space, I go to them,” says Raes. When she does, her mobile card reader is at the ready.

“In the past, most of my clients were paying by check,” says Raes. “I’d have to invoice them when I got home and then wait for the payment. Now I get paid on the spot. It’s great for someone like me.”

Raes uses Paypal Here because she had already been a big Paypal user. The transition was natural. “They offered it when it became an option and just sent me a reader,” says Raes. “It’s worked really well. The only time there are problems is when there are connection issues, but 99 percent of the time it’s fine.”

Today, credit card payments comprise roughly 80 percent of her transactions, and Raes believes it benefits all parties. “My clients want to get the points on their credit cards, so it’s an additional courtesy that I can offer them. I’m a high-ticket item, so that’s a lot of points. And for me it’s a more professional look.”

Nicole Bandklayder, owner of The Cookie Cups, sells her baked goods at farmers’ markets, and uses Square. “Square makes it easy to track sales and create reports, which helps tremendously with planning for growth,” says Bandklayder. “It is also a matter of convenience. Square is easy to operate on the fly at local events whether you are indoor or outdoor, electricity or not.”

The flexibility gives Bandklayder a sweet edge since most of her fellow vendors haven’t made the transition. “They don’t give customers the option and frequently miss out on sales,” she says. “Using Square, I have capitalized on all of my potential sales and have never looked back. Without it, I would definitely be missing out on a chunk of my business!”

Yet another mobile card reader fan is Jo Ellen Meyers Sharp, a freelance writer from Indianapolis. Sharp has written extensively about gardening, and hits the road on speaking tours where she sells her books.

“In the past, I always took cash or checks, but once I got Square, it has boosted sales by about a third,” says Sharp. “That’s huge! If I’m selling 15 to 20 books, five or six people will use their credit cards.” In fact, she likes Square so much she bought stock in the company.

With success comes competition – and decisions
“Back in 2009 it was exciting, this idea to accept a payment on a phone,” says Alex Rafter, spokesman for Square. “At the time that was very new. People were amazed that they could begin processing the payments right away.”

Naturally, the revolutionary concept soon spread. “Today there are approximately half a dozen main players on the mobile card reader scene,” says Phillip Parker, founder of, an Austin, Texas, based company that helps small businesses navigate card payment services through ratings and reviews. “Square is by far the biggest, but PayPal Here and Intuit’s GoPayment are also big. There are other up-and-coming players, and there will be more as technology advances. The market is changing fast.””

In fact, banks and credit card companies are also entering the sphere, and for good reason: people are increasingly mobile.

“Recent research reports showing that over 90 percent of businesses use a smartphone device to manage their business, “ says Keri Gohman, head of small business banking at Capital One. “Additionally, the number of business owners utilizing mobile apps to help run their business has doubled from 30 to 60 percent in just the past two years.”

Choosing a card reader
As mobile card readers become more prolific, those eager to accept card payments are sharing which system is best for business, and why.

Gerry Cassidy has been a San Francisco-based taxi driver since 1976. Although the cars are equipped with Flywheel, a cloud-based system that calculates fares and takes card payments (among other taxi-related tasks), drivers are testing out the variety of available options. “Its word of mouth,” says Cassidy. “We have downtime, like at the airport, so we’ll talk to each other while waiting around. What is the fastest and easiest,’? we ask. That’s what we really need.”

Cassidy prefers Flywheel because it’s quickest and riders dislike delays, but for back-up, he uses the QuickBooks GoPayment reader. “It’s a little more cumbersome and takes a little longer, but I can email a receipt. Some customers want that and you can’t do that with Flywheel.”

Cost, too, is a factor. Setting up the account and the hardware is usually free, but if more services are needed, such as complicated accounting software, it will be extra.

And then there are transaction fees. Sellers are usually charged between 2 to 3 percent of the transaction for “pay as you go” plans. High-volume businesses may opt for a plan with a monthly fee, but with lower transaction costs.

“I hate the fees,” admits Raes, “But I accept them because that’s the cost of doing business.”

Shop around and compare offerings, advises Gohman. “With the abundance of new mobile readers and payments tools coming to market, consider not just what’s ‘hot,’ but also what’s most important. Are your transactions protected and your accounts insured? Do you have access to customer service when and where you need it?” Card readers should also accept chip cards rather than just those with the magnetic strip, as well as virtual wallets like ApplePay.

Many people value the ability to call a company to discuss account issues, but that’s not always possible. “Communication with Square is usually done through email, but if you want to speak with a live person, you have to obtain an access code prior to calling,” says Parker. “They’re changing, but it still can be hard. It’s different with a company like Capital One, since they already have a customer support system in place.”

“People are sensitive about money,” says Parker. “They want to be able to speak to a real person when they have a problem, such as when funds don’t show up their checking accounts. If they can’t, they get frustrated and rightly so.”

Less cash, more cards, higher profits
For sellers willing to pay the fees and play by the rules of the mobile card reader company agreement, it pays to have one of these devices on hand. Not only do customers want it, they may soon expect it.

“I love the fact that places that used to be cash only, such as art and wine festivals, farmers’ markets and merchandise tables at events are coming around,” says Timothy Bednorz, a Campbell, California-based musician. “They were missing out on sales by being cash only.”

See related:Accepting international payments with Square, 7 merchant tips to understanding EMV fraud liability shift

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Innovations and Payment Systems

6 favors you can ask your card issuer

Looking for a better deal? It never hurts to ask, and good preparation increases the odds you’ll hear a ‘yes’

See more stories
Credit Card Rate Report
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more