Gravity Payments

What is a Virtual Terminal for Processing Credit Cards?

Virtual Terminals

virtual terminals

Virtual terminals (similar to a payment gateway) provide the same functionality as a physical terminal in a brick-and-mortar store, except you’re accepting payments online and you manually key in the credit card information.

With a virtual terminal, business owners with a merchant services account do not need a countertop point-of-sale (POS) system to be able to process their customers’ credit card payments. Instead, they can do it from any device with an internet connection.

How Does a Virtual Terminal Work?

Virtual terminals are hosted online and use a web interface to process credit card payments through card-not-present transactions. This gives small businesses the ability to accept payments on the go from a smartphone or tablet.

A variety of features and functions can be utilized by a virtual terminal from recurring billing, collecting and storing customer data, added security, and fraud prevention.

To use a virtual terminal, you typically log in to a page through a standard web browser and use a menu to process payments. This is often referred to as a merchant dashboard.

It’s similar to using a physical swiper or card reader, except that you manually enter the data instead.

What Devices Does a Virtual Terminal Run On?

You can use your virtual payment terminal for credit card processing on any device that has an internet connection and an internet browser.

This means that you can also use it on the go from your smartphone, tablet, or laptop – as long as you have internet access and a merchant account.

What is the Difference Between a Virtual Terminal and a Payment Gateway?

The main difference between a virtual terminal and a payment gateway is that a payment gateway is typically used for eCommerce transactions while virtual terminals are usually used by the business owner. However, some businesses use both means of accepting credit cards.

To break it down further, a payment gateway makes a connection between your business and the processor. It takes data from a secure hosted payment page or shopping cart, verifies the credit card information for accuracy, and then sends it to the processor.

Although a payment gateway is integrated into your website, without a virtual terminal it can only capture and process transactions on the customer’s end.

That means a virtual terminal enables you to actually go in and process those transactions as a business owner.

Used together, a payment gateway and a virtual terminal can offer secure, efficient, and reliable solutions through the entirety of the credit card processing journey.

RELATED: Merchant Accounts vs Payment Gateways: What’s the Difference?

What are the Benefits of Virtual Terminals?

There are many benefits of a virtual terminal for a small business owner. Those benefits include:

  • An easy and secure way to manually enter transactions.
  • Ability to access your account anytime and anywhere with a reliable internet connection.
  • Performing safe and efficient authorizations with no need for additional costly software.
  • Integrating with a payment gateway for a one-stop-shop solution.
  • Utilizing batch credit card processing by uploading all your transactions at once to save time and money.

What Businesses Typically Use Virtual Terminals?

Small business owners who accept payments via mail order or telephone (MOTO) or those who work from home, often benefit from a virtual terminal. 

Businesses that might be interested in a virtual terminal include:

  • Non Profit Organizations
  • Government organizations
  • B2B
  • Churches
  • Schools & Universities
  • Membership Associations
  • Bars & Restaurants that deliver and take payments at the door
  • Veterinarians that do on-site visits
  • Freelancers such as photographers, carpenters, and plumbers
  • And more!

What are the Costs Associated with Virtual Credit Card Processing?

Payments processed through a virtual terminal are card-not-present payments, which tend to have higher credit card interchange costs as they are considered higher risk.

To reduce your processing costs, you could turn it into a card-present transaction by connecting a USB card reader to your device so you can swipe the physical card instead.

Are Virtual Terminal Payments Safe?

Manually keying in credit card information always poses a slightly higher risk than using a secure POS.

Having said that, to ensure the safety of your credit card processing data, make sure your virtual terminal meets the following requirements:

  1. It uses end-to-end encryption to safely store and process credit card information.
  2. It follows good fraud prevention practices such as an address verification service (AVS), credit card verification value (CVV), or card identification number (CID).
  3. The device you use the virtual terminal on is safe and secure.

Also make sure your business is PCI compliant and you work with a reputable credit card processing company.

When these boxes are checked, the safety of a virtual terminal payment should be virtually the same as a card-present payment or a contactless payment.

Does a Physical Point-of-Sale System Have a Virtual Terminal?

Most modern Point-of-Sales (POS) terminals will come with a built-in virtual terminal you can also use, should you wish to. This means you will still get the same benefits a physical terminal gives you.

This is a useful option to have for when you are away from your physical terminal and need to process a credit card payment.

Clover devices such as the Clover Station and the Clover Mini Gen 3 come with a virtual terminal pre-loaded on your Clover dashboard.

Do Virtual Terminals Support Recurring Billing?

This depends on the terminal you use.

Clover supports recurring billing out of the box, as it is a feature accessible in the Clover dashboard that also works with Clover virtual terminals.

The Bottom Line

A virtual terminal is a useful tool to have if you need to accept payments in different locations and don’t always have access to a physical Point-of-Sale (POS) terminal.

Gravity Payments can help you get started with a virtual terminal. Contact us for more information.

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