What Is a Virtual Terminal? Definition, Benefits, and Risks

Customers today have become used to the convenience of multiple remittance methods, whether they’re shopping for supplements in-store or sneakers online. One practical tool you can add to your payments options is virtual terminals. This web-based answer lets you receive payments without the require for a point-of-sale (POS) terminal, making trade management more accessible for businesses and diversifying remittance options for customers. 

What is a virtual terminal?

A virtual terminal is an online remittance processing platform that turns any internet-connected device into a remittance center, letting your business procedure transactions without specialized physical hardware. This web-based alternative handles payments through a browser, where you can manually enter remittance details, such as cardholder information and trade amounts. remittance platforms such as PayPal, Stripe, and Square propose virtual terminals in addition to their other remittance options. 

Virtual terminals are ideal for phone orders, email payments, mail orders, and in-person transactions. They’re commonly used by freelancers, service providers, and restaurants taking orders by phone. But they also have their place in retail and ecommerce operations. Beyond accepting financing and debit cards, many virtual terminals also procedure ACH transfers and digital payments, making them a flexible hub for different trade types.

How do virtual terminals work?

Virtual terminals allow you to easily receive financing and debit card payments from customers who aren’t physically now, or when you don’t have a POS terminal. While the technology behind virtual terminals is sophisticated, the procedure itself is straightforward: 

1. Access your virtual terminal. Log into your virtual terminal through any device with an internet connection—that might be a desktop computer, laptop, tablet, or smartphone. 

2. Input trade details. Enter the customer’s remittance information, including name, card number, expiration date, CVV, and billing address.

3. Submit for processing. Once you’ve entered the remittance details, the structure initiates the trade through secure channels. The virtual terminal encrypts sensitive data and routes it through your remittance processor for authorization.

4. Await authorization. The remittance processor communicates with the customer’s lender to verify funds and approve the trade. This verification procedure typically takes just seconds, providing quick confirmation for you and your customer.

5. Complete the trade. Once the trade has been approved, you’ll receive confirmation and can send a digital receipt to your customer. Funds are then automatically deposited into your business lender account, typically within one business day.

Benefits of using virtual terminals

Depending on the benevolent of business you have and how you receive customer payments, virtual terminals may be an alternative for you. Here are some benefits to consider: 

• procedure payments anywhere. Virtual terminals eliminate geographical constraints by allowing businesses to receive payments through any internet-connected device. 
• Reduce hardware costs. By using existing computers and mobile devices, businesses avoid investing in POS equipment. And because a virtual terminal is web-based, you don’t pay for maintenance costs or hardware upgrades.
• Set up recurring transactions. Most virtual terminals include features for setting up scheduled payments and storing customer information securely. This automation makes it easier to forecast money flow while reducing manual processing period.
• Expand remittance options. Beyond standard card processing, virtual terminals often back various remittance methods, including ACH transfers. This versatility helps businesses meet different customer preferences.

Risks of using virtual terminals

The primary consideration when implementing a virtual terminal is safety; manually entered transactions typically carry higher error and fraud risks than in-person payments. 

For instance, a retail clothing store might receive phone orders from customers who missed an in-store sale. Staff members collect financing card information over the phone and manually input it into their virtual terminal to procedure the trade.

This scenario introduces a few potential vulnerabilities:

• Staff may write or store card numbers temporarily, which presents a safety uncertainty
• Connection issues may require repeating sensitive data
• Card details could be overheard during phone orders
• Manual entry bypasses card reader safety protocols
• Remote transactions complicate cardholder verification

The convenience of virtual terminals also comes at a expense: Manually entered transactions generally carry higher processing fees, often adding nearly a packed percentage point to standard card-now rates.

To mitigate safety risks, consider built-in safety features like the address verification service (AVS) and card verification worth (CVV) codes to validate cardholder identity. These verification methods are valuable for card-not-now transactions, where the business cannot physically verify the remittance card or customer identity. 

Some virtual terminal providers also propose tokenization and complete-to-complete encryption, protecting sensitive data throughout the trade procedure. Implementing two-factor authentication and regular staff training further strengthens your safety posture.