Card machine or payment gateway — do you need both?

The two get lumped together as "card payments", but a card machine and a payment gateway are built for different moments — one for a customer standing in front of you, one for a customer on the other end of a screen.

Card machine: the customer is standing in front of you

A card machine (also called a PDQ terminal, chip-and-PIN machine, or reader) reads a physical card or a phone's contactless chip, and connects to your acquirer's network to authorise the payment there and then. It's the right tool whenever the customer and the card are both physically present — a till, a table, a market stall, a van.

• Confirms the card is physically present, which lowers fraud risk and usually your transaction fee
• Needs hardware — a reader, terminal, or phone with Tap to Pay
• Settles to your bank account, typically the next working day

Payment gateway: the customer is somewhere else

A payment gateway is the software layer that takes card details typed into a website, app or invoice, and passes them securely to your acquirer for authorisation. There's no hardware — just an integration into your checkout, invoicing tool, or payment link.

• Handles "card not present" transactions: online stores, phone orders, invoices, subscriptions
• Usually charges a slightly higher rate than in-person, because card-not-present fraud risk is higher
• Needs extra fraud tools — 3D Secure, address verification — since there's no chip or PIN to check

Why so many businesses end up with both

A café that also takes deposits through a website, a tradesperson who invoices for the balance after fitting a kitchen, a shop that opened an online store during a quiet period — all of them need both channels. The good news is that several providers cover both under one account (Square, SumUp and PayPal POS all offer a card reader and an online payment link from the same login), which keeps reporting and settlement in one place even if the fee structure differs slightly between in-person and online sales.

Where phone and mail orders fit in

Taking a card number over the phone or by post is technically a card-not-present transaction too, usually called MOTO (mail order/telephone order). It runs through a virtual terminal — a web page where you type in the card details yourself — rather than a physical card machine, and it's typically priced closer to online rates than in-person ones.

Quick comparison