Virtual terminal payment processing is a software application that records digital card payments for merchants, much like a physical terminal would. It also enables businesses to take payments over the phone, by email or via mail, and can set up recurring payments that automatically process each month, week, or year. Many business types can benefit from using a virtual terminal, such as professional services businesses that bill their clients over the phone or internet (like doctors’ offices, accountants, and lawyers) or service-based businesses that take payments by mail or email (like landscaping companies).
To use a virtual terminal, a merchant simply logs in to their provider’s web-based portal on their computer, tablet, or smartphone and keyed in payment information. In most cases, this is the cardholder’s long card number, expiration date and the card security code. This is sent to the provider’s processor, who contacts the card’s issuing bank to verify that there are funds available and that the card belongs to the customer. The transaction is then approved or declined. If approved, the funds are then transferred from the customer’s account to the merchant’s.
Virtual terminals can be an excellent solution for small businesses that do not need a point of sale app or card reader but want to be able to accept cards over the phone, email or mail and enable recurring payments. However, there are a number of fees that can accompany using a virtual terminal, including transaction-based and monthly fees. Most providers charge a percentage of each card payment, a per-typed-in transaction fee and a monthly or annual fee. Some may also charge extra for advanced features, such as tokenization and fraud prevention tools. virtual terminal payment processing