How do card machines work? What a basic terminal costs you

The short answer

A good card machine splits the bill, prompts for a tip and shows any service charge. A basic one leaves staff reaching for a calculator.
Ask for a 4G or 5G SIM backup, so you can still take payments when the Wi-Fi or the power goes.
Learn your X and Z reports, stop printing merchant receipts you do not need, and keep a spare machine if you are busy.

Tony Berry has spent 16 years in card payments and runs Payment Guru and Tip4 from Kent. We asked him how card machines work in a real business, and what goes wrong. His answers are below, in his own words, from a voice note he recorded in October 2026, with two lines borrowed from his other notes.

He started with the machines he sees too often:

"There are very basic machines out there. Non-smart, limited reporting, real, real basic stuff. They won't have certain features on them, or the actual flow on the device is just not built for the business."

Published 5 November 2026. Checked against UK Finance, FCA and Payment Systems Regulator sources on 5 November 2026.

What should a card machine do in a pub or restaurant?

Three things, and a basic machine does none of them. If you run a restaurant or a hotel, this is the part that matters most.

"So, you know, a hospitality-led terminal should really have the ability to split the cheque, add tips incrementally, and make sure that there's a prompt to show where there's a service charge.

"There are also basic machines where you have to key the tip in manually, people haven't worked out how to split the bill, and it's a very poor process. Especially when the customer or the staff have to get out a calculator. That's a very poor way of doing it, especially when you're trying to clear a table quickly."

The cost is not the fee. It is the table you did not turn.

"It can have a huge impact on turning tables and the ability to get customers out through the door, not to mention the customer experience.

"This is the point where they've just had the experience and they want to leave. At that point, if you delay them, it can taint the experience. Whereas actually being able to do that well and slick can have a very positive impact."

What does a business owner actually need to understand about the machine?

The reports, and where the buttons are.

"In terms of basics, again, it's just being able to report on the terminal. Knowing what's gone through and what's not gone through, traditionally known as X and Z balances, whether that's at the end of a shift or the end of the day.

"And again, just actually understanding the basic use of the machine. Sometimes some of the functions are a little bit hidden. So how to actually pull the reports, how to see what's just gone through, and how to reprint a receipt, for example."

And one setting that costs money all year.

"Or receipt printing, because sometimes it's turned off. Some businesses still print a merchant copy now. Traditionally you needed one, but a lot of these devices now don't actually need the merchant copy, because you can see it in the reporting. And that can really add up in terms of the costs by the end of the year."

What happens to a payment if the machine loses signal?

The fix is a SIM card in the terminal, so it does not depend on your broadband or your power.

"Terminals can go down, and things can also happen with the communications. The best thing that can normally be done is, instead of having a device that's purely locked to the Wi-Fi or to Bluetooth, to actually have a 4G or 5G SIM card in there as a backup solution. So even if the phone line goes down, even if there's a power cut, there is a backup option."

If the machine itself dies, the real problem is how few you have.

"In terms of replacements, it's normally next working day. But I think the main issue is businesses who rely on a very small number of terminals."

How many card machines does a busy restaurant need?

One more than you think. He puts a price on it.

"Coming back to my own point, it's better to spend a little bit of extra money having more opportunities to take money from your customers, rather than relying on a few terminals in a very busy restaurant. Think of what that gives the staff, and the impact in terms of better service and clearing tables. For an extra five, 10, 20, £25 a month, it's well worth it."

Why are some cards more expensive to take than others?

From a separate note he recorded on card machine prices:

"It's very important to look at things in the round. It's made up of your debit card or credit card, commercial and international fees, which may be going through as premium charges, and your cardholder not present. But effectively, you should always have a facility that is priced accordingly for how you are transacting."

Does the tip prompt on the machine make a difference?

From a separate note he recorded on electronic tipping. Our tipping solutions page covers how the tip prompt is set up:

"If a customer ever has to ask "can I leave a tip?" because it's not incredibly clear, think how much you're leaving on the table. From our own experience, if customers are having to manually put in a value, check if a tip is included, or work out how to leave a tip, then for every one person asking, there's probably five who are just paying the base amount."

The rules, with sources

What happens when a card is tapped. The terminal reads the card, encrypts the details and sends them through your acquirer to the card scheme, which asks the customer's bank to approve. The approval comes back the same way in a second or two. The money is settled to your bank account later, on the timetable in your contract. Your statement then shows the fees: interchange to the customer's bank, scheme fees to Visa or Mastercard, and your provider's margin. Our article on what a card machine costs covers those three with sources.

How many payments are contactless. In July 2026 contactless accounted for 68% of credit card and 77% of debit card transactions in the UK. There were 2.2 billion card transactions in the UK that month, worth £73.8 billion. Source: UK Finance card spending data, update of 16 October 2026.

The £100 contactless limit has gone. On 19 December 2025 the FCA announced that from March 2026 banks and card issuers with strong fraud controls can set their own contactless limits. The limit a customer meets at your terminal now depends on their bank, and some banks have kept £100. Source: FCA press release, 19 December 2025.

If you rent the machine, the contract is capped. Since January 2023 the largest acquirers and terminal lessors cannot tie you into a terminal lease or rental for longer than 18 months, and it must roll monthly after that. Source: PSR policy statement PS22/2, 6 October 2022.

On "next working day" replacements and "£5 to £25 a month". Both are Tony's figures from the terminals he places. Replacement times and rental prices vary by provider and are not published in any UK dataset we could find.

Quick answers

How does a card machine work?
Tony: "A hospitality-led terminal should really have the ability to split the cheque, add tips incrementally, and make sure that there's a prompt to show where there's a service charge."

Do card machines work without internet?
Tony: "The best thing that can normally be done is, instead of having a device that's purely locked to the Wi-Fi or to Bluetooth, to actually have a 4G or 5G SIM card in there as a backup solution."

What are X and Z balances on a card machine?
Tony: "Knowing what's gone through and what's not gone through, traditionally known as X and Z balances, whether that's at the end of a shift or the end of the day."

Do I need to print a merchant copy of the receipt?
Tony: "A lot of these devices now don't actually need the merchant copy, because you can see it in the reporting. And that can really add up in terms of the costs by the end of the year."

What are the disadvantages of a basic card reader?
Tony: "There are also basic machines where you have to key the tip in manually, people haven't worked out how to split the bill, and it's a very poor process."

How quickly is a broken card machine replaced?
Tony: "In terms of replacements, it's normally next working day. But I think the main issue is businesses who rely on a very small number of terminals."

Next step

I get it. The machine works, the money arrives, and nobody has complained. But Tony's list is of things nobody complains about. They just split the bill on a calculator, skip the tip, and wait while the one terminal does the rounds.

Send Tony last month's card statement and tell him how many terminals you have and what they do at the table. He will tell you whether the machines you have are built for your business, what a spare would cost, and whether the merchant copy is still printing. If what you have is right, he will say so.

This will not suit everyone. A shop with one till and no tips has less to gain than a 40-cover restaurant on a Saturday night. If you want to see what the machines do first, the payment terminals page covers that.

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About Tony Berry

Tony runs Payment Guru and Tip4 from Kent. He has worked in card payments for over 16 years and set up Payment Guru to find businesses the right card processing, terminals and payment tools, and Tip4 to do tipping and tronc. He is the person who answers the phone. Payment Guru on LinkedIn

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How do card machines work? What a basic terminal costs you at the table