A card reader captures the card, encrypts the details on the device, and sends an authorisation request to your acquirer, which routes it through the card scheme to the customer's bank. The bank answers yes or no and the terminal prints or sends a receipt. The whole round trip usually takes about two seconds, and the money moves separately, later.
What the reader keeps and what it never sees
Card details are encrypted in the reader itself, which is why the hardware has to be certified and why a reader from one provider will not work on another's account. Your phone or tablet runs the app and shows the total; it does not handle the card data. That separation is what lets a consumer tablet be part of a compliant setup at all.
When the connection drops
Bluetooth readers depend on the paired phone, so a phone with no signal means no sale. Wifi terminals fail with the network. Machines with their own SIM keep working where there is mobile coverage. A few terminals support an offline mode that stores a transaction for later authorisation, which shifts the risk of a decline onto the merchant, so check whether yours does and whether you want it on.
Debit, credit and wallets on one device
The reader does not care which it is. It reads the chip, the contactless antenna or the phone wallet and passes the same request. What differs is the cost behind the scenes, because interchange is capped lower on UK consumer debit cards than on credit cards, and commercial and overseas cards sit outside the caps entirely.
Questions people ask about how does a card reader work
How long does a card reader take to authorise a payment?
About two seconds in normal conditions. The delay a customer notices is usually the network, not the terminal, which is why 4G machines feel faster than a Bluetooth reader on a weak phone signal.
Do card readers store card numbers?
They encrypt card data on the device and pass it to the acquirer. They are not designed to retain usable card numbers, which is part of what the hardware certification exists to guarantee.
Can a wireless card reader work anywhere?
Only where its connection works. Bluetooth readers need the paired phone to have signal; wifi terminals need a network; SIM terminals need mobile coverage. Check coverage at the places you actually trade before buying.