I am bit puzzled what you want to do?
There are a lot of posts about the M7E in this forum that contain information on how to connect. (like M7E Hecto Simultaneous RFID Reader Not Communicating - #4 by paulvha) Apart from that there is the hookup guide.
Setting SoftwareSerial as (3,1) does not make sense. The RX would become pin 3, and TX would become pin 1. BUT pin 1 is already used as TX for USB to connect to your PC.