Table of Contents
- What is a virtual terminal?
- What are the advantages of virtual terminals?
- How does a virtual terminal work?
- How to choose a virtual terminal for your business
- Is a virtual terminal the same as the payment gateway?
- Streamline B2B payments with Paystand
Key Takeaways
- Virtual terminals enable businesses to securely and efficiently process card-not-present payments without traditional hardware.
- They enhance payment security with encryption and PCI compliance, reducing fraud risks and ensuring data protection.
- Businesses can use virtual terminals to process payments, integrate with accounting systems, and access detailed analytics.
- Virtual terminals and payment gateways enable online payments, with virtual terminals helping businesses process transactions directly payments.
- Paystand’s B2B Payments Network combines virtual terminal technology and blockchain for fee-free, transparent, secure payments.
As businesses embrace digital payments, leveraging tools like virtual terminals is crucial for streamlining operations and driving growth. Virtual terminals replace traditional hardware, providing a seamless credit card processing solution. By bridging physical merchant accounts with online solutions, these systems enhance accessibility, security, and customer satisfaction.
Evaluating credit card pros and cons for your business or optimizing B2B payments, virtual terminals provide flexible, cost-effective solutions for your needs. Learn the benefits of virtual terminals, how they work, and strategies for implementation—and see how they can transform your business financial management.
What Is a Virtual Terminal?
A virtual terminal is a software application that enables businesses to accept payments in card-not-present scenarios, such as over the phone, via email, or other remote channels.
Unlike physical credit card terminals, virtual terminals operate online, transforming any internet-enabled device into a payment processor. This flexibility empowers businesses to expand their customer base, enhance revenue streams, and accept payments anytime, anywhere—without additional hardware.
Types of Virtual Terminals
- Mobile and Desktop Apps: Merchants manually enter credit card details into a point-of-sale (POS) app, which processes the payment and securely transfers funds.
- Web-Based Portals: Merchants input payment details through a secure online payment portal or web browser.
- Card Machine Screens: Customers enter card information directly into a terminal interface, similar to a physical POS system.
What Are the Advantages of Virtual Terminals?
Virtual terminals offer a range of benefits for businesses that need to process payments securely and efficiently. Some of the key advantages include:
- Accessibility: Accept payments from anywhere with internet access, eliminating the need for specialized hardware.
- Cost-Effectiveness: Reduce setup, maintenance, and transaction costs compared to traditional payment systems.
- Security Compliance: Use encryption and adhere to PCI DSS standards, minimizing fraud and data breaches.
- Versatility: Process credit cards, debit cards, and ACH payments with integration options for accounting and CRM systems.
- Streamlined Cash Flow: Speed up payment processing to minimize delays and improve financial stability.
- Customer Satisfaction: Offer secure, convenient payment options to enhance customer loyalty.
- Detailed Analytics: Leverage payment data to identify trends and improve decision-making.
How Does a Virtual Terminal Work?
When customers use a physical card machine, they tap or insert their cards, enter their PINs, or sign to confirm the payment. The transaction is processed, and the funds are transferred from the payer to the payee's backend.
Virtual terminals can be accessed from computers, laptops, tablets, and phones, allowing customers to enter their card details into the corresponding prompts on the web page. After the customer hits “submit,” the payment process is initiated, and the customer will be automatically debited to complete the transaction.
Virtual terminal technology processes payments in a PCI-compliant and highly secure manner, making them a very safe form of payment.
How to Choose a Virtual Terminal for Your Business
When selecting a virtual terminal for your business to accept online payments, prioritize security. Choose a PCI-compliant terminal with end-to-end encryption, tokenization, and fraud management tools (e.g., AVS, CID, CVV, and two-factor authentication).
Opt for a virtual terminal that accepts payment methods other than credit cards, such as ACH payments and eChecks. This will help you avoid the high interchange fees associated with credit card transactions, reaching up to 3.5% per transaction and significantly impacting your revenue.
Remember that a virtual terminal can offer more than just payment processing. It can streamline customer and inventory management or integrate with your ERP system. Additionally, ensure the terminal provides quick access to funds, as delayed fund disbursement can disrupt your cash flow and ability to meet crucial financial obligations.
What Types of Businesses Use a Virtual Terminal?
Overall, any business that needs to accept card payments but doesn't have a physical POS system can benefit from using a virtual terminal. They are particularly useful for businesses that operate remotely, have limited space, or need a flexible and convenient payment processing solution.
- E-commerce businesses: Virtual terminals are essential for online stores, as they provide customers with a secure and convenient way to pay for their purchases.
- Service-based businesses: Businesses that provide services, such as consultants, freelancers, and contractors, can use a virtual terminal to invoice clients and collect payments remotely.
- Home-based businesses: Virtual terminals are ideal for home-based businesses, as they eliminate the need for a dedicated POS system and allow for payment processing from any location with an internet connection.
- Brick-and-mortar businesses with limited space: Businesses with limited space, such as pop-up shops or market stalls, can use a virtual terminal to accept card payments without needing a bulky POS system.
- Businesses that accept phone or mail orders: Virtual terminals can process payments for phone or mail orders, providing a secure and convenient alternative to manual payment processing.
- Subscription-based businesses: Businesses that offer subscription services can use a virtual terminal to automate recurring billing and payment processing.
- Non-profit organizations: Non-profit organizations can use a virtual terminal to accept donations and process payments for events or merchandise.
- B2B businesses: Businesses that sell to other businesses can use a virtual terminal to process invoices and collect payments.
Is a Virtual Terminal the Same as the Payment Gateway?
Virtual terminals and payment gateways are integral components of online payment processing, but they serve distinct functions and operate differently.
| Payment Gateway | Payment Terminal | |
|---|---|---|
| Definition | Software that facilitates online transactions between a customer's bank and a business's bank | Physical device that processes card payments at a point-of-sale (POS) |
| User | Customer-facing | Merchant-facing |
| Function | Authorizes and processes online payments | Reads card information and transmits it to the payment processor |
| Location | Online | Physical storefront |
💡Key Differences
- Payment gateways are software-based, while payment terminals are hardware-based.
- Payment gateways are used for online transactions, while payment terminals are used for in-person transactions.
- Payment gateways are customer-facing, while payment terminals are merchant-facing.
Streamline B2B Payments with Paystand
Virtual terminals are just one example of how payment solutions are evolving to meet the demands of modern commerce. With Paystand’s B2B Network, businesses can elevate their payment processing through blockchain technology, ensuring secure, fee-free transactions while maintaining complete financial transparency.
By embracing innovative tools like these, businesses unlock better cash flow, reduced transaction costs, and seamless integration with ERP systems—all without the high fees associated with traditional merchant accounts or credit card processing.
Ready to elevate your payment processing? Download our eBook, Why B2B Companies Need to Adopt Blockchain Payments, and discover how Paystand empowers businesses with secure, fee-free transactions and seamless ERP integration.