Abstract: A method and apparatus for performing electronic financial transactions is disclosed having a card reader which may determine if the card being read is authorized for use with the card reader. The card reader also has a serial number which is sent to a clearing house at the time a request for authorization is made to validate the use of the card reader. Card data and the card reader's serial number are converted to DTMF tones at a customer's location and are sent to a merchant over conventional telephone lines thereby making a standard modem unnecessary. The DTMF tones are decoded at the merchants location and the data is sent by point-of-sale terminal to a clearing house for authorization. Furthermore, a traditional conversation may proceed with a merchant over the same telephone line as that by which the DTMF tones are being sent, eliminating the need for a second line at the customer's location.