Guide to merchant payment terminals

The global POS terminal market is expanding quickly — from USD 113.38 billion in 2024 to a projected USD 181.47 billion by 2030. The main drivers are contactless payments, mobile POS systems, and stronger security rules. No matter the industry, merchant terminals are at the centre of in-person payments, making transactions fast, secure, and reliable.

What is a merchant terminal?

The merchant terminal is the essential piece of hardware that allows your business to get paid. You may know it by many names—a payment terminal, a card machine, or a credit card machine. But its role is always the same: it's the device that facilitates an in-person, card-based transaction.

This hardware is built to handle the entire range of modern payment methods. It provides the interface where customers can insert a chip card, swipe a magnetic stripe, or simply tap a contactless card, mobile device, or digital wallet to initiate their transaction.

How merchant terminals work

Every card transaction goes through three main stages:

1. Authorisation: The terminal captures the payment details and sends a request through the acquiring bank and card network to the issuing bank. The bank checks the available balance, looks for signs of fraud, and verifies the card’s validity before approving or declining the transaction.
2. Capture: If the transaction is approved, the payment amount is placed on hold and recorded by the merchant.
3. Settlement: The funds are transferred from the customer’s account to the merchant’s bank account, typically within one to three business days.

Transactions can happen in two ways. In a card-present transaction, the customer physically uses the terminal by inserting, swiping, or tapping their card. These transactions usually carry lower risk because the card is verified in person. 

In contrast, a card-not-present transaction happens remotely, such as through an online checkout or over the phone. Because the card isn’t physically used, these transactions have a higher risk of fraud and often involve stronger security checks, such as two-factor authentication.

Types of merchant terminals

• Countertop terminals: Fixed units in retail shops or service counters, connected by Ethernet or phone line.
• Multi-lane terminals: Designed for supermarkets and large retailers, supporting multiple checkout lanes.
• Handheld/mobile devices: Portable terminals with wireless connectivity for use in restaurants or on delivery routes.
• Smartphone-paired readers: Small card readers that connect via Bluetooth to a phone or tablet.
• Unattended/self-service terminals: Used in kiosks, petrol stations, and ticket machines.
• Virtual payment terminals: Software-based solutions accessed via a computer or mobile device, suitable for mail-order or call centres.

Merchant terminals vs POS systems

While the terms are sometimes used interchangeably, there is a distinction:

The POS software market was valued at USD 12.7 billion in 2024 and is expected to nearly double by 2033, showing the increasing role of integrated systems.

Key features of merchant terminals

• Multiple payment methods: Accept chip cards, magnetic stripes, contactless NFC, and QR code payments in one device.
• Flexible connectivity: Operate through Ethernet, Wi-Fi, Bluetooth, or mobile networks (4G/5G), depending on business setup.
• Receipt options: Print paper receipts on the spot or email digital copies to customers.
• Security features: Meet PCI DSS and EMV standards and include tamper-resistant hardware to keep transactions secure.
• Remote management: Update software, run diagnostics, and monitor multiple terminals from a central dashboard.
• Multi-application support: Handle tipping, split payments, loyalty programs, and other value-added services alongside payment processing.

Supported payment methods

Merchant terminals commonly support:

• Cards: Debit, credit, and prepaid cards from major networks such as Visa, Mastercard, American Express, and UnionPay.
• Digital wallets: Apple Pay, Google Pay, ShopeePay, and other mobile wallet services.
• Contactless/NFC: Tap-to-pay cards and devices for quick, secure transactions.
• QR code payments: Popular in many regions, especially across Asia.
• Bank transfers: Supported on some devices through direct integration with payment providers.

Europe currently dominates the contactless payment market with 40% global share, driven by PSD2 regulation and widespread NFC-enabled terminals.

Uses of merchant terminals

Restaurant payments

Handheld card readers let servers bring the terminal directly to the customer. This improves efficiency, reduces errors, and increases security because the card never leaves the customer’s sight. Tipping and bill splitting can also be handled directly on the device.

Mobile POS for deliveries

Delivery drivers, field technicians, and service providers can use mobile card machines or pair terminals with smartphones. This allows them to accept card payments on-site, reducing cash handling and improving customer convenience.

Retail checkout

Large retailers and supermarkets often use terminals integrated with POS systems across multiple lanes. These setups support barcode scanning and a variety of payment methods, enabling fast, high-volume processing and keeping lines moving smoothly.

Hospitality transactions

Hotels and other hospitality venues use merchant terminals to manage preauthorisations for incidentals, collect deposits, and handle split payments between guests. This helps make check-in and check-out more efficient.

How to integrate with a POS system

Integrating a merchant terminal with a POS system takes some planning. Businesses typically follow these steps:

1. Decide on the setup: Think about whether a standalone, semi-integrated, or fully integrated setup makes the most sense for your business. Your decision will depend on how many transactions you handle, the kind of checkout experience you want to offer, and how much IT support you have.
2. Check compatibility: Make sure your POS software works with the payment terminals you want to use. Look at hardware specs, operating system requirements, and any certifications needed so you don’t run into issues later.
3. Choose integration method: You can connect systems using SDKs, APIs, or ready-made connectors. SDKs are usually quicker to set up, while APIs give you more room to customise.
4. Set up connectivity: Your terminal and POS need a stable way to talk to each other. This can be through Ethernet, Wi-Fi, or Bluetooth. If you run multiple locations, it’s worth using centralised tools to manage everything in one place.
5. Synchronise data flows: Check that transaction details, receipts, and settlement information go straight into your POS system. This keeps your reporting, inventory, and order management accurate.
6. Test transaction process: Before going live, run end-to-end test transactions from start to finish. Make sure authorisation, capture, and settlement all work as expected in both test and live environments.
7. Staff training: Give your staff clear instructions on how to use the integrated terminal, handle receipts, and fix basic issues.
8. Ongoing maintenance: Plan for regular software updates, security checks, and performance reviews. This helps keep the system running smoothly over time.

Choosing the right merchant terminal for your business

Match the terminal to your use case

The environment in which you operate will guide your choice. Countertop terminals work best for fixed retail settings, handheld devices suit restaurants, and mobile readers are practical for delivery and service-based businesses.

Consider your transaction volume

High-traffic businesses need terminals that can handle rapid processing and multi-lane setups without lag. Smaller businesses may prioritise ease of use and lower costs over throughput.

Plan your budget

Costs vary depending on whether you buy, lease, or subscribe to a terminal. Buying gives you full ownership, leasing spreads expenses over time, and subscription models often include service and software updates.

Evaluate required features

Focus on the functionality that matters most to your business. Contactless support, receipt printing, split payments, and remote management tools may be essential depending on your customers and workflows.

Check provider reliability

Look beyond the hardware. A strong provider should offer high uptime, responsive customer support, relevant compliance certifications, and a solid service track record. This helps reduce downtime and risk.

US merchants have adopted contactless terminals at scale, reaching 12 million by 2023, and global transactions rose by 300% between 2020 and 2023. Choosing the right terminal now positions your business to keep pace with the future of payments.