Virtual terminals explained – Everything you need to know about taking payments over the phone and by mail

Last updated on 29 September 2023

The dawn of technology has revolutionised the way businesses operate, with innovations in payment systems being a clear example of this transformation. For businesses that operate over the phone or through mail, traditional payment methods can present a host of logistical challenges. Virtual terminals are a digital solution to these problems, providing a secure and efficient means of processing payments.

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Understanding virtual terminals

At its most basic, a virtual terminal is an online portal that lets businesses manually enter credit or debit card information on behalf of a customer to process a payment.

They’re typically used in mail or telephone order (MOTO) transactions, though they can also be utilised by businesses without a physical storefront.

Virtual terminals are often used in tandem with traditional card readers, offering flexibility for businesses that need to take payments in different ways.

Video: Card readers and payment machines explained

Key features of virtual terminals

While the fundamental purpose of a virtual terminal is to process payments, most offer a range of features designed to enhance business operations.

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Security

Virtual terminals use encryption and tokenisation to keep cardholder data secure. The Payment Card Industry Data Security Standard (PCI DSS) sets the requirements for all businesses that process cardholder data. A compliant virtual terminal can help to reduce the risk of data breaches, providing reassurance to both the business and its customers.

Recurring payments and subscriptions

Many virtual terminals allow businesses to set up recurring payments or subscriptions. This can be a powerful feature for businesses with a subscription-based model or for those who invoice the same customers regularly.

Reporting and analytics

Advanced virtual terminals offer detailed reporting and analytics. Businesses can monitor transaction trends, identify best-selling products, and even track customer behaviour. This data can help businesses make informed decisions and refine their strategies.

Customer data storage

Some virtual terminals also include a customer database. Businesses can store customer contact and payment information securely, making it easier to process future payments and build customer relationships.

The virtual terminal process

The process of using a virtual terminal is typically straightforward, even for those with limited technical skills.

How to use a virtual terminal

  1. Collect payment information

    Over the phone or by mail, the business collects the customer’s card details, including card number, expiry date, and CVV (the three-digit code on the back of the card). For mail orders, this can be done using a form filled out by the customer.

  2. Enter payment details into the terminal

    The business then logs into the virtual terminal – which can typically be accessed from any internet-enabled device – and enters the customer’s payment details.

  3. Process the payment

    The virtual terminal processes the payment. This involves communicating with the customer’s card provider to check the details, ensure there are enough funds, and approve the payment.

  4. Payment confirmation

    Once the payment is approved, the virtual terminal provides a confirmation that the payment has been processed successfully. Businesses can then send a receipt to the customer, either by email or post.

Top 15 virtual terminal providers in the UK

While it’s crucial to find a virtual terminal provider that suits your business’s specific needs, some are generally well-regarded within the industry. Here’s a list of the top 15 virtual terminal service providers in the UK as of June 2023, in no particular order:

  1. Stripe: Renowned for its ease of use and flexible pricing, Stripe offers a virtual terminal with robust security and compatibility with various other payment systems.
  2. Square: Square‘s virtual terminal is user-friendly and free to set up. They offer a straightforward per-transaction pricing system and the option to take payments from anywhere.
  3. PayPal: As one of the pioneers of online payment systems, PayPal‘s virtual terminal is a reliable option that integrates seamlessly with a wide range of other services.
  4. Worldpay: As one of the biggest payment processing companies globally, Worldpay provides a host of features and integrations in their virtual terminal, though their pricing structure can be complex.
  5. Sage Pay: Now known as Opayo, Sage Pay’s virtual terminal is known for its robust security and flexible integration options, but it does come with a monthly fee.
  6. Barclaycard: A popular choice for UK businesses, Barclaycard‘s virtual terminal offers robust security, multi-currency support, and dedicated customer service.
  7. Nochex: Known for their support of small businesses and start-ups, Nochex offers a simple, secure virtual terminal with competitive transaction rates.
  8. Adyen: Adyen‘s virtual terminal offers broad international support, making it an excellent option for businesses that frequently handle international transactions.
  9. FIS Global: With a suite of features and integration options, FIS Global‘s virtual terminal is a solid choice, especially for larger businesses.
  10. Elavon: Elavon is well-regarded for its 24/7 customer support and robust security. Their virtual terminal supports a wide range of card types.
  11. Authorize.net: Owned by Visa, Authorize.net offers a virtual terminal with a strong suite of features, including advanced fraud detection.
  12. First Data: Now Fiserv, their virtual terminal provides extensive integrations, making it suitable for businesses with complex needs.
  13. PaymentSense: Offering a range of payment solutions, PaymentSense provides a reliable, user-friendly virtual terminal.
  14. PayVector: PayVector provides a PCI DSS Level 1 compliant virtual terminal, boasting a simple setup and strong customer support.
  15. Payzone: Payzone’s virtual terminal is praised for its simplicity and reliability. Their pricing is flexible, making it a good choice for smaller businesses.

Remember, the best provider for your business will depend on factors like the size and type of your business, your transaction volume, and the features you need. Therefore, it’s advisable to thoroughly research each provider to ensure it fits your specific requirements.

Choosing a virtual terminal provider

There’s a wide range of virtual terminal providers to choose from, each with its own strengths and weaknesses. Here are some considerations when choosing a provider:

  1. Ease of use: You’ll likely be using the virtual terminal on a regular basis, so it should be easy to navigate and use.
  2. Security: Check that the provider complies with PCI DSS standards. This is crucial for safeguarding sensitive customer data.
  3. Cost: Most providers charge a fee per transaction, but some may also charge a monthly fee. It’s important to compare costs and consider them in light of your business’s budget and anticipated transaction volume.
  4. Integration: If you’re using other payment methods, such as a card reader or an online store, you may want a virtual terminal that integrates with these systems.
  5. Customer support: Reliable customer support can be invaluable, particularly if you’re new to using virtual terminals or if something goes wrong.

Concluding thoughts

The rise of virtual terminals reflects the changing nature of commerce. For businesses looking to take payments over the phone or by mail, they offer a secure, efficient, and flexible solution.

They’re relatively easy to use, often providing added features that can enhance business operations.

Choosing the right provider can make the difference, so it’s worth taking the time to consider your options and find the virtual terminal that best fits your business’s needs.

FAQ

What is a virtual terminal?

A virtual terminal is an online payment application that allows businesses to process card payments manually. It’s often used by businesses that take orders over the phone or by mail.

How does a virtual terminal work?

The business collects the customer’s card details, enters these into the virtual terminal, and the payment is then processed. The terminal communicates with the customer’s card provider to check details and approve the payment.

Is a virtual terminal secure?

Yes, virtual terminals use encryption and tokenisation to keep cardholder data secure. Providers should comply with the Payment Card Industry Data Security Standard (PCI DSS).

Can a virtual terminal be used for recurring payments?

Yes, many virtual terminals allow businesses to set up recurring payments or subscriptions. This is useful for businesses with a subscription-based model or regular invoicing.

Can I use a virtual terminal for my e-commerce store?

While virtual terminals can be used for e-commerce transactions, they’re typically not the most efficient option for this purpose as they require manual input of card details. An online payment gateway, which allows customers to enter their own information, would usually be a better choice.

What should I look for in a virtual terminal provider?

Consider factors such as ease of use, security, cost, integration with other systems, and the level of customer support.

Are virtual terminals expensive?

Costs for virtual terminals can vary. Most providers charge a fee per transaction, and some also charge a monthly fee. It’s worth comparing costs from different providers.

Can I use a virtual terminal on a mobile device?

Yes, most virtual terminals can be accessed from any device with an internet connection, including smartphones and tablets.

How quickly are funds from virtual terminal transactions available?

Funds availability can vary between providers. It typically ranges from immediate availability to a few business days.

Can I use a virtual terminal for international transactions?

Yes, many virtual terminals can handle international transactions, but check this with the provider as additional fees may apply.

Do virtual terminals support all types of cards?

Most virtual terminals support a wide range of card types, including Visa, MasterCard, and American Express, among others. However, specific card acceptance may vary by provider.

What kind of businesses benefit from a virtual terminal?

Any business that takes payments over the phone, by mail, or without a physical storefront can benefit from a virtual terminal. This includes professional services, delivery businesses, and e-commerce businesses that also take orders in other ways.

Do I need technical skills to use a virtual terminal?

No, virtual terminals are designed to be user-friendly. Basic computer skills should be sufficient.

What is PCI DSS compliance?

PCI DSS stands for Payment Card Industry Data Security Standard. It’s a set of requirements designed to ensure that businesses process, store, and transmit credit card information securely.

Can a customer use a virtual terminal to make a payment themselves?

No, virtual terminals are designed for businesses to manually enter payment information received from customers.

Can a virtual terminal store customer data for future use?

Yes, many virtual terminals include a secure customer database that can store customer contact and payment information for future transactions.

Can I issue refunds through a virtual terminal?

Yes, most virtual terminals allow businesses to issue refunds for previous transactions.

Can virtual terminals help me track sales?

Yes, many virtual terminals offer reporting and analytics features that can help you monitor transaction trends and customer behaviour.

How do I provide a receipt to my customer after a virtual terminal transaction?

After the payment is processed, most virtual terminals allow businesses to send a receipt to the customer by email or post.

Do I need a separate merchant account to use a virtual terminal?

This depends on the provider. Some virtual terminal services require a separate merchant account, while others come with a built-in merchant account.

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