Magnetic and chip readers are common in retail environments as point of sale terminals. This is how you use a credit card or mobile device to make a payment.
Point of sale terminals support different formats. Your credit card may have an integrated circuit in it. You then physically slide the credit card into the point of sale terminal. The point of sale reader then has a physical connection to the circuit in your credit card to obtain the information.
Another format is magnetic strip. Your credit card will have a magnetic strip on the back. You can slide your card through the magnetic reader on the point of sale terminal.
If the card reader is connected to a physical point of sale terminal, it is usually connected via USB.