Payment Hub

Virtual Terminal: How It Works & Best Practices

Published  |  7 min read

Each company has its own set of needs, whether it’s a fast-food restaurant, medical facility, freelance web designer, or large enterprise. Those needs include simple and secure credit, debit, and ACH/eCheck payment processing that caters to that company’s unique workflows.

For example, if a business does not have cash for a new credit card terminal, or if it prefers a different payment method, tabletop credit card terminals and point-of-sale (POS) systems may be the solution.

Or what if you don't engage with your consumers or clients in person, or you operate an inbound call center that takes orders by phone? Or perhaps you don't have enough money to invest in hardware or software. How do you intend to accept digital payments?

Many firms, regardless of size, choose a virtual terminal as their answer. This cloud-based payment terminal is a webpage in your internet browser that allows you to conduct transactions from anywhere with an internet connection on any device. So, what exactly is a virtual terminal and who should use it? Watch that video about InterPayments up above, then keep reading.

virtual terminal basics

Basics of a Virtual Credit Card Terminal

A virtual terminal, also known as an online payment form, is a web-based software that allows you to accept electronic or digital payments by phone, internet purchase, mail order, fax, email, or in person.

For in-person payments, you’ll use a card reader that’s connected to a computer via a USB. For other methods, you’ll need an internet connection and a web browser.

One of the best things about a virtual terminal is that there aren’t any extra hardware or software parts to acquire, so it usually ends up being much cheaper than a physical payment terminal.

Who Benefits from a Virtual Terminal Merchant Account?

A virtual terminal solution may help any type of business, but it is typically suited to:

  • Freelancers – Graphic designers, content writers, and other creative services professionals who may work remotely and do not deal with their customers in-person
  • Restaurants – Take-out restaurants, DQSRs, and dine-in places that take orders by phone for delivery or curbside pickup
  • Professional services – Accountants, doctors, and attorneys who may see clients in their office but also take payments over the phone for medical expenses, tax preparation, legal services, etc.
  • Retailers – Individual brick-and-mortar stores that don't require a credit card reader or complete POS system
virtual terminal merchant account
virtual terminal payments

How Does a Virtual Terminal Work?

It's quite simple to get started with a virtual terminal. You will, depending on your merchant account provider:

  • Open a virtual terminal on your computer or smartphone by logging into an online dashboard or B2B payment gateway.
  • Select the payment method: Credit/debit or eCheck/ACH transaction.
  • Fill in the sales amount, and any other order notes.
  • Fill in the card number or bank account information on the internet form, as well as any billing data required.
  • Click the Submit Transaction button to finalize your purchase.

Confirmation is sent that the card has been accepted or rejected. If approved, most virtual terminals provide clients the option of sending them a copy of their receipt.

Enable Recurring Payments

You can also add recurring payments using a virtual credit card terminal. While you only need a virtual terminal to accept one-time payments, you may be able to set up recurring billing as well.

For example, if you run a landscape company that provides weekly lawn care services or deal with business accounts that bill monthly, you may use recurring payment solutions for your clients within the virtual terminal that fits their budget and your accounts receivable requirements.

recurring payments
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Issue Refunds & View History

In addition to executing payments within the virtual terminal, you can also issue refunds and view your transaction history.

When conducting a card-not-present (CNP) transaction, it's important to keep in mind that phone and mail orders, for example, often cost more because of the additional security risks. You must trust that the individual providing the account information is indeed the cardholder.

In a CNP transaction, whether you key in data yourself or let the customer do it manually, the sale is considered a card-not-present transaction, even if the client is standing in front of you.

Consider accepting ACH payments or eCheck as well as credit and debit cards to minimize your transaction processing costs when using a virtual payment processing terminal. This form of electronic payment usually costs less than traditional card transactions. For all in-person sales, use a USB card reader to reduce your processing fees.

tokenization and end to end encryption

Tokenization and End-to-End Encryption

Virtual terminal transactions are permitted by a payment gateway, which can enable tokenization technology and end-to-end encryption to safeguard sensitive data while moving it through your payments system.

When a consumer gives their payment information, the personal account number (PAN) is replaced with a randomly generated alphanumeric ID, known as a “token,” that is only meaningful to the B2B payment platform processor.

By keeping track of the status of your vendors, you no longer have to store sensitive information on your system, thereby vastly reducing the possibility for a security breach. You may also reduce PCI scope and liability by eliminating this burden. The tokenized data is then transformed before being sent to the payment processor, which will route the transaction via the card payments network.

Benefits of Recurring Payments

Recurring payments provide a lot of advantages for both you and your customers. Payments automatically arrive on time, every time, thanks to a payment plan that is convenient and adaptable for both sides.

Cash flow and customer retention improve when recurring payments are offered because of the convenience and flexibility they provide for consumers. That’s why we were sure to include this feature in our Payment Hub Virtual Terminal.

cirtual terminal recurring payment option
level 3 payment processing

Levels 2 and 3 Processing

The interchange rates are set by the card-issuing banks and make up the majority of transaction expenses. These costs are determined by a variety of criteria, including whether the card was present and whether it was swiped, dipped, or hand keyed. The lower your interchange costs are, the more information you provide on a transaction.

Consider adding Levels 2 or 3 payment processing for your clients if you accept B2B or B2G transactions. These sorts of credit card processing methods include more data, such as customer codes, tax amounts, and tax identifications, to help you reduce interchange costs and accommodate your B2B and B2G customers more efficiently.

Clarity’s virtual terminal has Level 3 transaction capability, so you have all the options you need for your business’s payment processes.

Fraud Management Tools

A virtual terminal is used by a large number of firms to process phone or email purchases, making those CNP transactions. Because these are not in-person transactions, fraud tools such as address verification service (AVS), credit card verification value (CVV), card identification number (CID), or two-factor authentication (2FA) are required to verify the customer's identity.

  • You can request a billing address in order to compare it to what the card-issuing bank has on file with AVS. You have the option of verifying against complete addresses or zip code comparisons.
  • The 3-digit code on the back of the card, or the 4-digit code on the front of the card, can be requested to determine if a genuine card is being presented for payment versus a stolen credit card number when utilizing CVV/CID.
  • Customer-initiated electronic payments are verified using two factors that are linked together, such as a user receiving a text message to their registered phone to confirm that they are the real account holder.
Fraud Management Tools
point of sale system with a virtual terminal

Point-of-Sale System with a Virtual Terminal

The ability to accept payments outside of your physical POS system provides you with more flexibility in terms of payment acceptance. For example, Clarity Virtual Terminal functionality is readily available in the Clarity Web Dashboard from a desktop computer or mobile device.

You may process transactions and refunds anytime and anywhere. The PCI-compliant virtual terminal safely saves repeat consumer information for faster and safer purchases. You have the option of sending emails to your customers as well as conducting direct marketing processes using their existing contact information.

Learn More About Clarity Payment Hub

Payment Gateway With a Virtual Terminal

The most frequent use of a gateway is to receive payments for goods and services online, but it has evolved to provide a smooth buying experience across all sales channels and devices in today's payment environment.

In addition to eCommerce transactions, Clarity Payment Hub may be used to connect payments with your accounting or CRM software, as well as manage transactions on a virtual terminal, point-of-sale system, or mobile device.

Payment Gateway With a Virtual Terminal
using a virtual terminal

Why Do You Need a Virtual Terminal?

Whether you use a virtual terminal as your primary credit card acceptance method or not, it's always a good idea to have more payment settlement alternatives. You may never know how the business or economy will change over time, and you'll need to adapt quickly if you must accept CNP payments over the phone or by mail.

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Discover Your Virtual Payments Solution

If you’d like to learn more about what virtual terminal and payment processing capabilities your business needs, Clarity can help. We offer a free discovery session with our experts where we’ll help you find the right solution for your business, no strings attached. Check it out by clicking the button below and signing up.

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Autumn Spriggle is a Content Writer at Clarity Ventures with experience in research and content design. She stays up to date with the latest trends in the tech industry so she can write content to help people like you realize the full potential for their business.