What is a Virtual Terminal?

No matter what kind of business you run, a virtual terminal can be a useful tool for accepting credit cards. Just as physical terminals are used to collect customer card information as part of a transaction, virtual terminals are used to manually collect card information and process payments via the internet.

No matter what kind of business you run, a virtual terminal can be a useful tool for accepting credit cards. Just as physical terminals are used to collect customer card information as part of a transaction, virtual terminals are used to manually collect card information and process payments via the internet.

Think about the last time you purchased something online -- you were probably asked to provide payment information during checkout, including your card number, expiration date, billing address, security code, etc. A virtual terminal is essentially the same, but the information is entered by the merchant rather than the customer. While virtual terminals are most commonly used for orders placed over the phone, they can be very useful to business owners who don’t want to spend money on traditional payments hardware or point-of-sale systems.

Nowadays, virtual terminals are offered by most payment processors, but they typically will not be part of your service unless you specifically request access to a virtual terminal. Be aware that this service may cost you a small monthly fee, usually no more than $15 per month.

If you plan to use your virtual terminal in a physical location, many processors provide basic hardware to expedite the collection of the card information. You’ll find basic USB card readers between $20 and $50, but recent EMV regulations are making those much less attractive. We recommend springing for a USB EMV chip reader, which typically run between $50 and $80.

Even if you don’t accept cards in-person very often, it may be worth it to get one of these USB readers. Swiped cards incur lower interchange fees than cards entered manually, so forking over a little cash now will save you money in your monthly statement.

You should also be aware that virtual terminals require PCI compliance, just like any other method of accepting payments. Whether the virtual terminal is the only way you accept payments or just one of many channels you use, make sure to provide your processor with a certificate of compliance with the PCI DSS. Doing so will ensure that you don’t pay an unnecessary non-compliance fee.

So, let’s sum up the virtual terminal with a little pros and cons list. Weigh these against each other to determine whether a virtual terminal will be a good fit for your business:

Virtual Terminal Pros

  • Allows you to take payments anywhere without any dedicated hardware. So long as you have an internet connection, you can accept payments on your phone, laptop, or desktop computer.
  • Doesn’t require your customer to be present -- you can enter card information shared via phone, email, or fax.
  • No need to pay for complex hardware or a point-of-sale system.

Virtual Terminal Cons

  • Because most transactions taken through virtual terminals are card-not-present, you may be more vulnerable to chargebacks.
  • Manually keying in customer information can be time-consuming and more prone to human error.
  • Electing to forego hardware can lead to higher interchange costs. Without the right hardware, users may still be susceptible to EMV fees.

If you have any further questions about virtual terminals, don't hesitate to reach out to the payments experts at SwipeSum. We're happy to help any business find their best payments solution, totally free of charge.

Stephen Seaman

Stephen is the co-founder and COO of Swipesum. A resident of St. Louis since 2014, Stephen loves local microbreweries and ping pong.

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