The invention discloses a fixed network payment terminal and an operation method thereof. The fixed network payment terminal consists of a microprocessor, a singlechip, a keyboard, an LCD display screen, a Flash memory, a printer, an IC card reader, a magnetic card reader and a PSAM card reader, wherein the singlechip, the keyboard, the LCD display screen and the Flash memory are connected with the microprocessor and used for dialing a telephone, editing short messages, inputting bank services and editing menus; and the printer, the IC card reader, the magnetic card reader and the PSAM card reader are connected with the singlechip. The operation method thereof comprises that: after a system is powered and initialized, the system enters an idle state, and a main function of the system is continually searched whether to be interrupted; and when the interruption happens, the type of the event is judged by interrupting a vector table, and a corresponding event processing function is entered. A fixed line terminal and a POS terminal are integrally inosculated, so the fixed network payment terminal and the operation method thereof save the manufacturing cost of equipment, have high cost performance, and have the functions of receiving and transmitting short messages and reading bank IC cards.