What is a Chip and PIN Machine and How Does it Work?

Illustration of Chip and PIN machine

According to UK Finance, in May 2022 there were two billion transactions made using a UK-issued debit card, worth a total of £60.8 billion. Most of those transactions were made using a Chip and PIN machine.

In fact, you’d struggle to find a store in the UK or the rest of Europe that doesn’t use a Chip and PIN device to process card payments. But what exactly is a Chip and PIN machine, and how does a Chip and PIN reader work?

Let’s look at the different types of Chip and PIN machines, how much they cost, the benefits of using one in your store, and the best Chip and PIN reader for your small business.

What is a Chip and PIN machine?

Chip and PIN technology was first introduced to the UK in 2003. Contactless credit cards appeared in 2007 and were closely followed by the launch of contactless debit cards in 2009.

Chip and PIN machines process credit and debit card payments, making in-store transactions easier and more secure. Before, you would have to physically swipe your card through a machine and sign a receipt. It took a long time, and if a customer’s card was lost or stolen, it was easy to forge a signature and commit fraud. 

Chip and PIN changed that. According to Statista, although there have been spikes, the overall counterfeit losses on UK-issued cards plummeted from £110.6 million in 2003 to just £8.7 million in 2020. 

How does Chip and PIN technology work?

The EMV (Europay, Mastercard, and Visa) chip inside a Chip and PIN card stores the cardholder’s bank account information, including their name, account number, and the card’s expiry date. When the card is connected to a Chip and PIN machine, there’s an exchange of data about the transaction, complying with a standard created by Europay, Mastercard, and Visa. To make sure the cardholder is the person making the transaction, they need to enter a unique four-digit PIN or personal identification number.

Once this is entered correctly, Chip and PIN technology facilitates the exchange of encrypted data between the card machine and the cardholder’s issuing bank, where payments are checked and approved. An authorized payment will usually reach your business bank account in three to five working days.


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Types of Chip and PIN machines

To run a successful store in the UK and Europe, you’ll need a Chip and PIN machine—but what type of Chip and PIN system best suits your business?

Countertop Chip and PIN machine

A countertop Chip and PIN device requires a physical connection, so it’ll be located at a fixed point. This is perfect if you’re running a small store with a static shop till system and for places where the Wi-Fi isn’t particularly strong.

Portable Chip and PIN machine 

A portable Chip and PIN reader gives you the freedom to take your device directly to your customer and process payments using a Bluetooth or Wi-Fi connection. You’ll notice a lot of restaurants and cafes using this system, but the mobility it offers is also beneficial for retail shops.

The portable device comes with a base unit, which is connected to an electrical supply that charges the machine. Most portable machines have an operating range of about 100m from the base unit.

Shopify POS Chip and PIN machine image

Mobile Chip and PIN machine

What’s more portable than a portable Chip and PIN machine? A mobile Chip and PIN machine!

Mobile Chip and PIN readers can accept payments from almost anywhere.

They have a built-in SIM card and connect to the strongest available mobile network.

Although these devices also come with a charging base, you don’t have to be near it to make a transaction. That makes mobile Chip and PIN systems perfect for businesses on the go. If you run a market stall or regularly sell at events, this is a great option for your business.

Retail POS system with Chip and PIN machine

Integrated EPOS or POS system

An electronic point-of-sale system or EPOS (also known as a point-of-sale system or POS) is much more than a card machine. As well as allowing portable and mobile card transactions, it gives you the option of taking a variety of digital and cash payments. 

As it’s connected to a wider store data system, your inventory levels update automatically, customer information is at your fingertips, and you can integrate directly with your ecommerce website to unify omnichannel sales. 

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How much do Chip and PIN machines cost?

Chip and PIN machines have different functionalities to suit your business needs, which means prices can vary. Think about where you want to use your devices, how much mobility you need, and whether you want to connect your card reader to a POS system

Benefits of using a Chip and PIN machine

Chip and PIN technology offers retailers many benefits. Let’s look at the most important of them:

Boost customer satisfaction

Chip and PIN technology makes it easy for customers to pay by debit card or credit card; with the addition of contactless payments, many machines also accept payments via phone apps.

There are 95 million active debit cards in the UK as of May 2022 and 59 million credit cards. The population of the UK is only 68 million people, so that gives you some indication of just how popular this method of payment has become. 

In fact, debit cards became the most popular UK payment method in 2017.

If you’re not offering customers the ability to use Chip and PIN machines, you’re not giving them what they want, and they’ll find it somewhere else.

Accept contactless payments

In 2022, the limit for individual contactless payments in the UK rose to £100. UK Finance says that 83% of people in the UK use contactless payments to complete a transaction. 

According to Merchant Savvy, 17 million people in the UK were registered to use mobile payment at the end of 2020. This new form of contactless payment is becoming particularly popular among younger customers, so it’s likely to continue to grow over time. To accept these payments, you need a good Chip and PIN reader, a great EPOS till system, or a combination thereof.

Better payment security

As mentioned above, counterfeit card fraud has dramatically reduced since the introduction of Chip and PIN machines. Transactions almost always go through without any disputes, and every payment is heavily encrypted. 

Handling less cash is also safer for you and your customers. It’s a lot more difficult to steal money that’s transferred directly to your bank account, and your customers won’t be carrying around wads of high-value paper just in case they need to buy something. If their cards get stolen, the Chip and PIN protections in place make it harder for thieves to spend their money.

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Increase speed and convenience

Paying by credit or debit card and using a Chip and PIN machine is more convenient for you and your customers. Gone are the days of your customer having to go to a bank or cash machine to withdraw the extra £20 for the upsell item you’ve just sold them. 

With Chip and PIN technology, your customer can just check their phone to make sure they have enough money in the bank or enough credit on their credit card, tap, and pay. It’s easier and it’s quicker. That also gives you more time to spend on the next customer—who’ll probably also pay using your Chip and PIN machine.

Depending on the type of Chip and PIN device you have, you can also accept payments from any part of your store. A customer can pay your store staff on the retail floor, and if they have mobile contactless payments enabled, they can literally tap and go.

Choose the best Chip and PIN machine for your small business

You know what a Chip and PIN machine is, you know how it works, and you’re up to date on the different types of Chip and PIN devices available. Now that you understand the benefits and importance of connecting the right Chip and PIN machine to your POS system, it’s time to choose the best Chip and PIN machine for your small business.


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