What is a Virtual Terminal & How Does It Work?

Last Updated on August 9, 2023 by Labib Ahmad

If your business interacts with customers over the phone or accepts orders remotely, using a virtual terminal can make it easier to accept payments and decrease the time it takes for you to get paid.

Virtual terminals work well for businesses that are looking for flexible ways to accept payments from customers they don't see in-person. Whether you want to use the virtual terminal as your primary payment tool, or as a supplementary tool for only the occasional payment, a virtual terminal is a great option for businesses in all different types of industries.

If you are not yet familiar with what a virtual terminal is or how it can help your business, we will provide a basic overview of what it is and how it works, along with how it can help your business and some examples of businesses that are using virtual terminals to streamline their payment processes to better serve their customers.

Some of the impressive benefits of the Virtual Terminal include:

• The ability to take payments on the go
• Save time and reduces mistakes
• Save payment information securely
• Set up recurring billing

What is a virtual terminal?

A virtual terminal turns your computer into a credit card terminal so you can use a device you already have instead of having to purchase additional equipment to accept credit card payments. The virtual terminal works as a web-based interface that you can enter a customer's payment information into when you need to process a payment.

After you have logged into the account provided by your payment processor, you will enter the customer's name, credit card details, and address to process the payment. For added security, most transactions today will also require the three-digit security code on the back of the card. Asking for this additional piece of information will help you avoid processing fraudulent transactions by verifying that the cardholder has the credit card in their possession at the time of payment.

Transactions run through the virtual terminal are completed in real-time, just like with in-person payments. Once the transaction is approved, most virtual terminals will give you the option to email a digital receipt to your customer. The online nature of the tool and the digital receipts mean that virtual terminals work great for businesses that need to bill customers remotely or for those that accept payments over the phone.

How does a virtual terminal work?

Think of all the functionality and processes that a traditional terminal performs, and then imagine making them digital, that is what a virtual terminal does. It's simply an online version of your standard countertop terminal.

The virtual terminal will use your internet connection to send and receive the information it needs to process your transactions, allowing everything to happen in real-time. When you enter the cardholder's information those details are communicated to the bank and you will know right away if the transaction is approved or declined. Just as you would if the customer was in front of you with their credit card.

Unlike using a payment gateway, or when you check out at an online store as a customer, a virtual terminal is designed to be a merchant facing tool. So it's always you, the business owner, and not your customers, entering the information and processing the transaction. If you're looking for customer-facing online tools, setting up a payment page or an online store would be a better solution.

What do you need to use a virtual terminal?

Most payment processors offer a virtual terminal alongside their other payment processing solutions and tools, while it's important to confirm there aren't any additional fees to access the virtual terminal, usually, you can expect that they will be included with your account.

Due to the online nature of the tool, as long as it's included in your account, all you need to do is log in on your preferred device to access your virtual terminal. This makes it incredibly easy to accept payments from anywhere and keep in touch with clients if you're on the road, on vacation or traveling between locations.

Once you are logged into your virtual terminal, to accept a payment you'll just need the customer to provide their payment information as we mentioned in the section above. Most virtual terminals will require you to enter the following:

• Cardholder name
• Credit card number
• Credit card expiry date
• CVV or security code
• Street address
• ZIP or postal code

If your payment processor offers customer management as part of your account, you can often reference an existing customer profile when accepting payments for repeat customers. Having access to the customer's stored credit cards makes processing repeat payments quick and easy.

Does my small business need a virtual terminal?

There are a lot of reasons why your business might want to use a virtual terminal for its payment processing. Here are some of the top reasons why we think virtual terminals are a great way to accept payments remotely.

You can accept payments from anywhere: All you need is a computer or laptop and an internet connection to accept payments. You don't need to meet with customers in-person or bring additional hardware with you. Whether you're accepting payments from home, at your store, or while traveling, the process will be the same.

It's easy to bill repeat customers: If your payment processor includes customer management with your account, it's easy to pull up customer details and process payments for the card they have on file. Being able to access payment information that is stored on file lets you serve customers efficiently and helps save you time.

The payments are secure: Your payment processor should be PCI compliant and any customer information stored on file should be securely kept in a card vault. These two steps give your business peace of mind that sensitive information is being securely stored. Having access to a virtual terminal also means you don't need to worry about your team writing down credit card information when customers call to make a payment - which is something they should never do. Instead, your team can simply log in to your virtual terminal and process the payment immediately.

No additional equipment costs: You can access your virtual terminal on devices you already own. If your business doesn't meet with customers in-person, there is no reason for you to purchase and maintain additional hardware. Having access to a virtual terminal helps you avoid all those additional equipment costs.

Included with your account for no extra fee: Most payment processors include access to a virtual terminal with their additional payment tools. If there is an additional fee to have access to a virtual terminal, it might be worth shopping around a bit more as there are plenty of providers who won't charge you extra to use it. With an increased need for flexible and adaptive payment tools, you want to partner with a payment provider that enables your business to do more, without charging you unnecessary extra fees.

Keep all your payment information in one place: We're big fans of finding an omnichannel payment solution for your business. Gone are the days when only one type of payment solution or tool was needed to effectively serve your customers. While there are now plenty of different solutions available in the marketplace, there is a risk that your sales information becomes fragmented if you partner with multiple processors for different components of your payment needs. When you choose an omnichannel payment processor that offers in-person solutions, a virtual terminal, invoicing, and an online store all through one account, you can consolidate your business's data. This makes it easier to keep track of how your business is doing and look up transaction information when you need it.

What does it cost to accept payments using a virtual terminal?

Accepting payments through a virtual terminal will be subject to the card-not-present credit card processing transaction fees for that payment. Depending on your payment processor, you might be charged the same flat rate for all card-not-present transactions. If your payment processor offers Interchange Plus pricing, the transaction fee will vary depending on the card brand used by the customer. In both cases, the credit card processing fee will most likely be slightly higher than a card-present transaction due to the potentially higher risk that is inherently part of card-not-present transactions.

Even with slightly higher fees, most businesses still find it's worth it to accept card-not-present transactions because of how much easier and faster it is for them to get paid. An additional benefit of accepting credit cards is that it improves the customer experience and makes it easier for customers to make large purchases from your business.

Who can use a virtual terminal?

No matter what industry you work in, or what your business does, if you accept payments over the phone or from customers remotely, you can use a virtual terminal. Here are just a few examples of the different ways businesses can use a virtual terminal to get paid:

• Food delivery companies can accept orders and payments over the phone so items are paid for before they are made and delivered.
• Catering companies can take orders online, then call to confirm and process the payment before completing the order and delivering the items.
• Freelancers or contractors can ask customers to call and submit payment when their invoices are due or call to let the customer know when work is complete, so they can pay without having to arrange an in-person meeting.
• Professional service providers including doctors, lawyers, or accountants can have their support team follow up by phone to collect payment once tasks are complete. Making it easy for customers to submit their payments.
• Auto mechanics can call customers when they have a quote for work that needs to be completed and collect deposits for parts or complete payments over the phone, so when the customer comes to pick up their vehicle the work is already paid for.
• Delivery services including pharmacies, liquor delivery, or florists can call to accept payment before they head out to deliver items. With immediate approvals, they can be confident the products are paid for before they are dropped off.

Additional features to make payments easier

The more robust and integrated your virtual terminal is with the rest of your payment environment, the easier it will be for you to manage your business and streamline your payments. Here are some of our favorite features that we believe make it easier to get paid.

An Integrated Customer Manager: Having the tools needed to save your customer's information including their payment cards can make billing repeat customers a lot faster. It also helps you track order history, identify your top customers, and spot purchasing trends. If your account lets you create customer profiles, you can simply search for and select the customer you need when processing payments in your virtual terminal, making the entire payment process significantly faster.

Support for Recurring Billing: If you find that you're often billing the same customers for the same service, month after month, you might find that you need a recurring billing solution to simplify your payment processes. Having the ability to automate these recurring payments, instead of needing to manually process them, can save your business a lot of time. If your business has recurring payments, it's worth checking to see if your virtual terminal includes a recurring payment option, or if a similar tool is readily available within your account.

Inventory Management: Maintaining accurate inventory is important in knowing what items are in stock and when you need to order in more. Whenever you accept payment through your virtual terminal, the information from that transaction should sync across all your sales channels, and update the available inventory counts for the products you sold.

Security: Choosing a payment provider that prioritizes keeping your sensitive information secure and protected should be one of your top priorities. A good payment provider will make it easy for you to access cardholder information when you need it while following strict data security requirements and helping to reduce your business's compliance scope.

Need to accept payments?

If your business needs to accept credit and debit cards in person or online, Helcim provides honest, transparent, and affordable credit card processing that stands out in an industry known for shady business practices and customer exploitation. Our Interchange Plus pricing is widely regarded as the most honest and affordable billing method in the industry and our customer service is consistently lauded as a step above. If you have any questions or would like a complimentary rate comparison, don't hesitate to contact our friendly Support Team.