- Highs: No monthly fee. Simple transaction rate. Straightforward process. Commitment-free.
- Lows: Detailed transaction information has to be recorded separately. Receipts unsuitable for tax purposes. Refunds take up to a week to clear.
- Use if: You want to get started quickly with phone payments without committing to a contract or monthly fees.
Virtual terminals allow you to take payments over the phone using the browser on a PC, Mac or any other device such as a tablet. No other equipment is needed.
Square offers a free virtual terminal, which was unheard of before this American company arrived in the UK. You don’t even have to use any of Square’s other services – the card reader, Point of Sale system or Invoices – to get access.
The only cost is a flat rate per payment taken through the virtual terminal. There is no contractual commitment.
Accepted credit and debit cards include Visa, Visa Electron, V Pay, Mastercard, Maestro and American Express.
Key-in transactions with Square
- Virtual terminal through a web browser on computer, tablet or mobile phone
- Keyed-in card entry in Square app on phone or tablet
- Emailing or sharing a URL for an invoice created in app or web browser
= all at 2.5% per transaction
Square doesn’t charge for anything else, and that includes refunds and chargeback processing. They also handle the admin side of chargebacks for free.
Because there’s a slightly higher risk of fraud for key-in card payments, you should take extra precautions in some payment scenarios – more on that below.
Compared to other virtual terminals in the UK, Square’s fees are pretty competitive:
The above costs are greater than Square’s, except for if you have a large sales volume, in which case PayPal and Worldpay can get cheaper. SumUp’s high rate is fixed regardless of transaction volume and card, and you’ll also need to have a history of using the SumUp card reader to qualify for using the virtual terminal.
All it takes to set up Square’s virtual terminal is to sign up and get your bank account verified. Once you’ve added business details and clicked to sign up, you’ll have instant access to Square Dashboard features from any web browser. You don’t need to download the Point of Sale app, which is for face-to-face transactions.
Even though it takes about four days to get your bank account verified by Square, you can still process payments straight away. The money will just be held in your Square account until your bank account is connected with the Square system, after which settlement takes 1-2 days following each transaction.
Processing the phone payments really couldn’t be easier. First, you log in to your Square Dashboard in a browser. Any device with an internet browser can be used, as long as you have a WiFi or network connection.
Click ‘Virtual Terminal’ in the left-hand menu of your back-office account, then the ‘Take a Payment’ button. A simple page with information fields is shown. This is where you enter the following card and payment details:
- Order/transaction amount
- Reporting location, if you’re selling from more than one location
- Card number
- Expiry date of card
- CVV/CVV2 of card (security digits on the back of the card)
- Optional: add a description or note for the purchase
The virtual terminal page only allows you to enter the most basic information, so you can have a quick checkout experience. Image: Mobile Transaction
After the sale is put through, you have the option to send a digital receipt via text or email (you’ll need a mobile number or email address from the customer if they ask for this) or print a receipt via a connected printer.
If you need to record the customer’s details, e.g. a home address for postage, you can do that through the ‘Customer Options’ link on the payment confirmation page (after the payment is processed). Clicking this will show a pop-up with the option to either create a new customer profile which will be linked to that purchase, or link the purchase to an existing customer in your customer directory.
You can also add the card details to a customer profile for recurring or future payments – if the customer signs a form to give you permission for this. Once saved, the virtual terminal will give you the option to select that customer and process the payment using the saved card details. But note: saved cards can at any time be removed by the customer through a link they receive in an email.
If you expect to offer refunds, you’ll need to warn your customers that this can take up to seven days to process. This is not that unusual for online payments, but it could cause some grief for those who did not expect such a delay.
To avoid payment issues, Square recommends taking certain precautions during customer-not-present card transactions. Although it’s not required to complete a PCI Self-Assessment Questionnaire for card-not-present merchants like some virtual terminal providers demand, you are responsible for doing your bit to minimise the risk of issues.
Chip and contactless payments are inherently safer than remote payments, due to the card being processed electronically through a terminal and the customer being physically present to verify ownership of the card. But you can also ask for extra details over the phone or mail order form to ensure the customer is the owner of the card.
If you need to keep a customer’s card details on file – for instance, for recurring payments – Square requires that you get the customer to sign a Credit Card Authorisation Form to help protect yourself from chargeback liability.
This form is downloadable through the Customer Options pop-up after a virtual terminal sale and the Add Card pop-up in the customer profile. You need to print and complete it and get the customer to sign this paper document, which you then keep on file for as long as you store their card details.
To save card details, you will be asked to get written permission from the customer.
Square also suggests asking the customer for the cardholder’s name as written on the card and the full address of the cardholder. These can’t be included in the virtual terminal form directly, but you can store them securely by linking the sale to a new customer profile, in order to cover yourself if there’s a chargeback claim.
Although the virtual terminal works seamlessly, it has some limitations. Businesses who need to record more detailed, transaction-specific information will need to add this either to Square’s customer profile directory or separately in their own documents.
The only extra field you can add any information to during the transaction is the “Note” field, but anything you enter here will be shown in your Square dashboard, sales reports and the payment confirmation your customer receives. Suffice to say, you cannot add any personal or otherwise sensitive information here.
We like the option for customers to rate the merchant on the digital receipt.
Items from your Square product library cannot be added to the transaction either. If you need to analyse or track stock levels of a product sold through the virtual terminal, you’ll need to manually keep track of it.
Furthermore, taxes can’t be added to the order. The receipt even states “this is not intended to be a tax invoice”, so we don’t recommend using the virtual terminal for payments from VAT-registered businesses.
However, if you’re planning on using Square Point of Sale or Invoices, you’ll benefit from the integration between all payments in your Square account. All of these transactions can be analysed together or separately, as well as exported to Xero or Excel.
Receipts can be customised to include business logo, address, contact details, refund policy, social media links, personalised messages and more. Customers can even give feedback through the receipt, and you can monitor the responses in the Square account.
Who is it best for?
Square aims to be a great, easy solution for most small-business types, whether you sell in person, online or remotely. The card reader and customer-not-present payment options makes it excellent as an integrated hub for all your transactions – that is, at least until you want a more complicated virtual terminal.
Businesses travelling a lot should be aware that Square can only be used in the country they’re registered in. Similarly, UK users can only charge in GBP, not other currencies.
Having tried Square’s virtual terminal, we think it’s very efficient for immediate payments in the simplest way possible. That said, if your business needs to record or track detailed transaction-specific information, it may not be your best choice (we’ve rated the best alternatives).
While Square is great for their wide range of payment methods, it does not include options to upgrade to a more advanced virtual terminal.
Square is arguably cheaper for small businesses than the virtual terminals offered by PayPal and Worldpay. SumUp offers a fixed-rate structure similar to Square’s, but their fee is higher and you need to have a history of in-person transactions before SumUp can activate the virtual terminal.
Bottom line: Square Virtual Terminal is currently the easiest and most economical way for a small business to start taking phone payments.