The Online Payment Processing Solution for Every Business
Are you running a boutique, a restaurant, or maybe a marketing agency? No matter what kind of business you own, having multiple payment options is a must for efficient working and growth. This means you should be able to accept credit cards, debit cards, ACH/eChecks securely. For this, you need a POS system, a credit card terminal, or similar hardware. But, what if you offer outsourcing services, e.g. marketing agency, or own an online store? Or, you are just starting out and don’t have enough money to invest in a credit card terminal? That’s easy! You need a virtual terminal.
What Is A Virtual Terminal?
A virtual terminal, a.k.a. “cloud terminal” is a secure web-based credit card processing software that allows you to process transactions anytime, anywhere, and on any device that has an internet connection. It is referred to as “virtual” or “cloud” because it doesn’t have hardware like a physical terminal, only web-based software.
How Does a Virtual Terminal Work?
The virtual terminal is usually embedded on a web page when you are logged in to your payment provider’s account. It allows you to process transactions by manually entering your clients’ card details which you have been given via an online chat, mail, or phone. Upon entering that info, their card is being processed and then charged. When the card is charged, the money is transferred to your bank account or payment provider account, minus the processing fees. Learn more about NFC Mobile Payments.
Using a virtual terminal, you can accept payments online (remotely) or in person. However, if you want to use a virtual terminal for in-person payments, you’ll need a card reader.
All you need to process payments is a desktop computer, laptop, tablet, or smartphone. The device will be your “hardware” terminal.
How to Process a Payment via Your Virtual Terminal?
If you’re using a virtual terminal for the first time, you may not be sure how to process payments. But, don’t worry because it’s super-easy.
It works pretty much the same as when you’re shopping online and paying with a debit/credit card. Namely, to process a payment via your virtual terminal, you need to:
- Connect to the internet
- Log in to your bank account of payment provider account.
- Open the virtual terminal page.
- Select the payment type: debit card, credit card, or ACH/eCheck.
- Enter the amount of money to be charged and any order notes, if needed.
- Enter the customer’s card details you’ve been given over the phone, e-mail, chat, or message.
- Click the Submit (or similarly named) button.
That’s it! You’ve successfully charged your client’s debit or credit card. If you check your bank or payment provider account, you will see your money.
Note that after submitting the card details, you will receive confirmation, usually as a pop-up window, that the transaction has been processed. You will also receive a confirmation if the card is declined. Depending on your payment provider, you can also send a copy of the receipt to your customer’s email.
What makes virtual terminals great is that apart from processing payments, you can also issue refunds and access your transaction history.
Card-Not-Present (CNP) Transactions: Risks and Solutions
Virtual terminals use card-not-present (CNP) transactions. This means that the transactions are done by manually entering the card’s details, not by using a card reader, regardless of whether the customer is standing next to you or gives your information via phone, chat, or e-mail. Since you enter the details your customer tells you and can’t verify that the customer is the actual cardholder, the risk of fraud is higher. As a result, the processing fees are higher.
To reduce the transaction processing fees, consider accepting ACH/eCheck apart from debit and credit cards. This type of payment usually costs less than debit and credit card payments. Alternatively, you can use a USB card reader for in-person sales.
Who Can Use a Virtual Terminal?
In short: anyone! Yes, any type of business can use a virtual terminal for processing their transactions. However, it is the best fit for:
- Restaurants – dine-in or fast food restaurants that take orders over the phone for delivery or pick up.
- Retailers – usually small-size stores that don’t need a credit card reader of a point of sale system.
- Freelancers – professionals that work remotely and most probably don’t have any direct contact with their clients.
- Professional services – accountants, lawyers, doctors, and other types of businesses that see their clients occasionally but also accept transactions over the phone for tax preparation, legal fees, medical bills, etc.
Apart from using the virtual terminal for one-time payments, you can also use it for recurring payments. For example, if you are a freelancer working with an agency or the same client all the time and you have an agreement for weekly, bi-weekly, or monthly payments, you can schedule payment requests in advance.
Are Virtual Terminal and Payment Gateway the Same?
Both, virtual terminals and payment gateways are essential in ecommerce. They are quite similar in their functions, which makes people wonder if they are the same thing.
Well, NO, a virtual terminal is not the same as a payment gateway. Virtual terminals are more focused on the merchant and allow them to initiate and accept payments. Payment gateways, on the other hand, offer more than processing transactions. Plus, they allow the customers to enter their details and card details to process their transactions.
To explain this a bit simpler, imagine the virtual terminals like virtual checkouts in the supermarket. But instead of the checkout operator, you (the merchant) enter the client’s details and their card details to charge them. On the other hand, payment gateways are the systems (software) that allow you to pay with your card when shopping online. So, you fill out the information needed and initiate the payment, not the merchant.
To summarize, virtual terminals are mostly used for purchases made in-person, over the phone, through e-mail, or on the go. They are used by businesses that don’t have a website or don’t accept online sales. Payment gateways, on the other hand, are used for online purchases allowing the customers to pay for their orders.
Virtual Terminal Features and Products
Virtual terminals are much more than software for processing transactions. They have various features and products to support and improve your payment processing needs. Let’s check them out!
Tokenization and End-to-End Encryption
Security is the most important feature when it comes to credit card processing. To ensure all sensitive data stay protected, virtual terminals use tokenization end-to-end encryption within your payment system and during transactions.
Tokenization is when numerical data from the customer, such as the credit card number or personal account number, are replaced with a randomly generated alphanumeric ID, a.k.a. token. The token is useless and meaningless to anyone except the payment processor, which means no one can decipher and find out the real number.
After the sensitive data has been tokenized, the gateway encrypts it and sends it to the payment processor, which processes the transaction.
Did you know that the interchange fees make up the largest part of the processing costs? They are determined by the card-issuing bank and their fees are based on several factors, such as if a card has or hasn’t been used, if it was dipped, swiped, or hand-keyed. The more information is entered per transaction, the lower the interchange costs are.
To lower your interchange costs, it’s best to use Levels 2 or 3 for your clients when accepting B2B (business-to-business) or B2G (business-to-government) transactions. It’s because these credit card processing methods include more data, such as customer tax amounts, tax identifications, and codes, which lowers your interchange fees and helps you serve your clients better.
This feature is very helpful when it comes to charging long-term clients. It’s perfect for freelancers who work with the same clients for a long time and any other type of business that has recurring payments from their customers. It allows you to create a payment schedule so that you always receive payments on time. This increases your cash flow, offers flexibility and convenience to your customers, and improves customer retention.
Virtual terminals also come with tools for fraud prevention and management. The most common are two-factor identification, credit card verification value, card identification number, or address verification service. Having them is essential for preventing fraud during CNP payments as they help you confirm if the person using the card for payment is the actual cardholder.
Here’s how these tools can help you:
- With two-factor identification, you can confirm if the customer is the cardholder by using two factors like a text message on the customer’s phone.
- With credit card verification value and credit card identification number, you can ask the customer for the 3-digit code on the pack of the card or the 4-digit code on the front to confirm if the card presented is the customer’s card or stolen.
- With an address verification service, you can ask your customers for a billing address to see if it’s the same address as the one in the card-issuing bank’s file.
Virtual Terminal Products
POS Systems with a Virtual Terminal
POS systems with a virtual terminal allow you to accept payments away from your physical POS system. This means you can accept and process payments and refunds wherever you are, at any time. Also, the system stores the information from repeating customers which allows faster and safer transactions. Plus, you can use the customer information for email and direct marketing.
Payment Gateway with a Virtual Terminal
We’ve already discussed the difference between virtual terminals and payment gateways. But, we didn’t mention that you can use them both, at the same time, to make the most of your business.
Thanks to technology, payment gateways nowadays come with an integrated virtual terminal, which allows you to make the most of your business. This combo not only allows you to accept and initiate payments but also to integrate the payments with your CRM software or accounting software or process them on any device you want: your virtual terminal, mobile device, or physical POS system.
Benefits of Using Virtual Terminals
Accept Payments On the Go
Thanks to the virtual terminal, you can accept payments and process them anywhere you are as long as you have an internet connection and a mobile device. By accessing your virtual terminal, you can authorize credit card transactions, send email receipts to your customers, check your transactions history, give refunds, and more.
Receive Funds Fast
By using a virtual terminal, you will receive your funds really fast. It’s because authorizing and processing them is done very quickly and your money is almost immediately deposited into your account.
Automatize Your Payments
Good virtual terminals allow you to schedule your recurring payments. By doing so, you won’t have to worry about initiating payments from your clients again and again as the system will do it for you.
Save Money on Equipment
Whether you are just starting out or simply want to save money, a virtual terminal will save you a good amount of money. It’s because you don’t need any special equipment to use it, except a laptop or another mobile device and an internet connection. Hence, you don’t need to invest in POS systems and physical terminals. And, if you want to accept card-present transactions, a card reader will do the work without breaking your bank.
As already mentioned, virtual terminals come with various security features, including tokenization, encryption, and fraud management tools. They help you verify the actual cardholder, prevent fraud, and chargebacks made on purpose.
What Should You Look for in a Virtual Terminal Merchant Account?
There are many virtual terminals on the market, but not all of them are the same. While they share the basic features, they differ in some, which is why you have to find the one that best suits your business needs. In order to choose the right virtual terminal for your business, you should look for the following features:
- Security features – A reliable virtual terminal uses tokenization and at least P2P encryption to protect sensitive data.
- ACH/eCheck processing – These payment methods help you reduce your interchange fees, which are high when using CNP payments.
- Recurring payments feature – To automatize your recurring payments.
- Inventory management – Very important for ecommerce businesses since you don’t want to sell products that have already been sold out. With this feature, you will always know how many items you have in stock.
- Customer information database – Very useful feature if you want to store your customers’ payment method information so that they don’t have to fill out the card details every time they make a purchase.
Virtual terminals are kind of a must-have nowadays. Even if you already have a POS system or a countertop terminal, supplementing your checkout options is a good idea. Having multiple options give your more freedom and flexibility in working. Plus, you never know what may happen in the future. Maybe the economy will change or you will start accepting orders over the phone, e-mail, or chat. And, since virtual terminals don’t require additional costs, you won’t lose anything, but get something.
Need to process Online Payments?
Beyond Bancard is the Solution.