Your customers want simple ways to pay using any method they choose, but it’s not always practical to invest in an expensive point of sale solution. A virtual payment terminal offers an attractive alternative for processing credit cards and other popular payment types.

What is a virtual terminal?

A virtual terminal is a digital payment terminal hosted on third-party servers. It’s similar to an online payment gateway, except you’re the one filling in customers’ order and payment details.

Setting up a virtual terminal enables your business to accept payments when customers aren’t physically present, such as orders made over the phone or through the mail. If the terminal is accessible through a mobile app, you can process transactions in locations other than your physical store.

Virtual terminals are usually available from merchant service providers and payment processors. Most cloud-based POS solutions also offer this option.

What types of payments can virtual terminals process?

Customers can pay via a virtual terminal with a credit card or debit card. Businesses operating on subscription models may be able to set up recurring payments for products and services. If a customer returns an item or requests a refund, you can process the reimbursement from your virtual terminal’s dashboard.

Virtual payment terminals included as part of other payment processing or POS solutions may come with monthly fees, as well. This is important to keep in mind when comparing providers so that you have an accurate idea of how much it will cost to use the terminal.

How do virtual terminal transactions work?

You can use any computer or internet-enabled mobile device for this payment processing method. To process a transaction:

• Log in to the terminal or app.
• Enter the order information.
• Enter the customer’s payment and billing information.
• Submit the order.

The transaction then passes on to your payment processor and is authorized the same way as other credit, debit, or ACH payments. Once the order is approved, both you and the customer receive notification. Your processor transfers the money to your business account according to their timeline for the payment type used in the transaction.

It’s actually a pretty straightforward process without a steep learning curve, so anyone in your business can take orders on your virtual terminal without the need for extensive training. 

What are the benefits of a virtual terminal?

By diversifying your payment options with a virtual terminal, you: 

• Get the flexibility to grow your business without purchasing extra equipment.
• Are able start accepting new payment and order types almost immediately.
• Can attract new customers with additional payment choices.
• Can accept card-not-present payments in any setting.
• Will spend less than you would on other payment processing solutions.
• Minimize setup and onboarding time.

This payment processing option works best for businesses offering deliveries, remote services, or professional services. Since customers don’t have to be present to pay, you can process transactions prior to delivery and outside of regular office hours. Freelance businesses can take clients’ payment information over the phone or send invoices to collect payments via email.

One drawback is the extra time needed to input customer information compared to swiping a credit card. Transactions take a little longer and of course there’s always the risk of entering card or bank account information incorrectly. Be sure to use extra care to prevent declined payments and ensure customers have positive payment experiences.

What features should a virtual terminal have?

You can probably get set up for virtual payment access through your merchant services provider or payment processor. If you don’t currently have a way to process credit and debit card purchases, you’re likely to be better off looking into a full payment processing solution or POS platform instead of relying exclusively on a virtual terminal. However, a virtual terminal can be a good way to get started with new payment options when you’re operating on a budget.

Cost is, of course, a big factor. Compare providers’ pricing, remembering to add in any monthly fees for the service. Also make sure the terminal is equipped to process a variety of different payment types to provide your customers with as many options as possible.

Security should also be a top concern. Make sure your virtual terminal is PCI DSS compliant and uses the latest encryption and tokenization methods to protect sensitive customer data as it travels through the payments ecosystem. Finally, transactions should be verified using addresses and CVV numbers for identification.

Whether you need an easy way to start accepting credit cards or want to add phone, email, and mail transactions to your business model, a virtual terminal may be just the ticket. Expanding your customers’ payment options can help you grow your business and provides flexibility to adapt to any selling environment!