Mobile credit card readers scan the magnetic strip on the back of a credit card to obtain customer account information, as The Nest reports. This data then allows the reader to transmit a processing request to the customer's bank using an encrypted connection and charge the customer's account.
The bank issuing the customer's credit card receives a request notification to charge the account, as The Nest explains. If the bank approves the transaction, it electronically transfers funds from the customer's account to the merchant's payment processor. From there, the funds transfer directly to the merchant. Payment processors typically charge merchants a fee for payment services. This fee may be a percentage of the payment amount, a flat rate for each charge, a membership rate or a combination of these three.
Payment systems offer a variety of features to merchants, as The Nest reports. Merchants may print receipts for customers or send text message confirmations of charges. Without the customer's card, merchants may still charge the account, as The Dallas Morning News reports. Payment processors may charge merchants an additional fee for this service, and the merchant must have the customer's account information at hand. Fees associated with different payment services may vary tremendously based on the type of service and the transactions used.