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How to choose a mobile card reader for your business

By Kristen Frisa

Email this article: How to choose a mobile card reader for your business  Email 
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Cathy Kennedy, independent stylist at Studio 11 Hair Designs in Strathroy, Ontario, has a simple answer for why she and her partners chose mobile card readers in place of traditional wired POS machines: convenience.


"We're independent in here," Kennedy says. Each stylist keeps her own accounts and is paid separately in the jointly owned business.

"We would have to separate everything at the end of each day if we used one unit for everyone," she said. "It's just simple."

While the decision to use a mobile card reader may be a no-brainer for small-business owners like Kennedy, the decision about which one to use can be a bit tougher, and depends on your company's needs.

Which mobile reader is right for you?
The variety of mobile card readers has widened significantly over the past several years in Canada, although several brands available in the States are not available north of the border.

Devices come in different shapes and sizes. For instance, some look a lot like a calculator, others look like traditional POS machines, and some are small attachments for your phone.

The systems all work with their own apps, which you can download free from your mobile device's app store.

Rick Oglesby, senior analyst with Double Diamond Payments Research, says the product features aren't the largest differentiators, but rather the companies themselves - where they come from and their pre-existing customers - are.

For instance, he says the Square app focuses more on small mobile retailers and food service providers such as cafes, food trucks, caterers, pop-up retailers, etc.

"Their offering includes not only payment acceptance, but also a lightweight point-of-sale system that replaces a cash register with a tablet app," he says.

The market for mobile point-of-sale (mPOS) systems is mostly small businesses. However, Oglesby notes, "the trend seems to be that mPOS providers are developing more features and moving upmarket."

Because there are more businesses hopping on the mobile bandwagon, more comprehensive solutions are becoming available. While there are still readers, like Square, that connect into your phone so that you pass your device to the customer to complete the transaction, many others, like Dream, offer a separate, Bluetooth-connected handset. And some, such as Shopify, stand up to turn your tablet into a countertop-type experience.

Fees and processing times
While the devices are free or low-cost, each provider charges fees for transactions.

All readers have a swipe rate (the cost to you, the seller, for each customer credit card transaction).

The apps also come with the option to key in the credit card number. However, keying in the card number holds a higher fraud risk, so those transactions cost a bit more.

Company Swipe rate
Key-in rate     
Flat fee    
Debit available?
Compatible devices
Moneris PAYD
2.65% 2.85%+$0.15 n/a No Android, iOS
Square 2.65%  

3.4 percent + $0.15 n/a No
Android, iOS
Shopify POS 2.7%; 2.6%; 2.4%
$29/mo; $79/mo; $299/mo
If you add a Moneris card reader to your package
Android, iOS
Dream Payments
2.75% n/a
n/a Yes, $0.25/transaction

Each reader provides customers with an electronic receipt that can be sent by email or text. Some, such as Dream Payments Debit & Credit Card Reader, offer inventory and accounting solutions within the app that pairs with the mPOS device.

Security and transaction speed
The card readers are fully encrypted, and the information is only decrypted on the service providers' servers.

However, Oglesby says there can be other glitches. For example, what if you're in an area that doesn't have great cellphone coverage?

"If coverage isn't great then transactions can be difficult to run," he says. "Also, the transactions can process more slowly than with traditional payment terminals."

The companies themselves sometimes experience technical difficulties that result in conversations with the customer support. But Kennedy says while there have been a few times when the card readers won't connect, the problems often are quickly resolved.

There also can be problems with the device itself. Kennedy says most of the staff have had to replace their readers at least once in the two years they have been using them because buttons break off.

Harry Todd, accounting clerk with Trenval Business Development Corporation, says small businesses that use mobile technology should still be careful to keep good paper records of their transactions.

"One of the biggest things we run into with small businesses is that they don't retain the proper records for income tax," he says. If records turn out to be hard to retrieve, "they might get into trouble with CRA, so I might recommend they have a good paper trail."

Paper trails are important, especially if the government starts to suspect you've been circumventing tax law. That happened to Square customers earlier this year, when the Canada Revenue Agency requested customer lists from the company.

Todd reminds small-business owners that mobile technology can still be tracked, so going through proper channels is the safe way to go.

"As long as you're above board it's a good thing," he says.

See related: 4 things you should never put on a business credit card, No more lost lunch money: Cards replace cash in schools

Updated: August 31, 2017