What is a virtual terminal?

By | 2017-09-09T08:51:16+00:00 March 16th, 2016|Tags: |

It is becoming increasingly important for small businesses to be able to accept manual payments. Manual payments are transactions that are completed without the card holder present, for example if you take a booking, reservation or order for a product over the telephone. However, in order to take a manual payment you need to have two things – a virtual terminal and an internet connection.

Simply put, a virtual terminal is a computer software program that allows you to take money safely and securely from your customer’s debit or credit card and put it in your own account.

If you have shopped online you will have been directed to a payment page, where you have input your information, your card information and clicked “pay”. A virtual terminal is almost identical and you can process a payment in a three easy steps.

  1. Ensure you are connected to the internet and then log on to your virtual terminal. (You will need to set up an account with your payment processing provider first).
  2. Enter the details as prompted by the program while the customer is on the phone
  3. Click on the “submit” (or similarly named) button.

Though the magic of technology you can take payment from your customer by securely charging their credit or debit card.

See also: How to take payments over the phone

Advantages of virtual terminals

  • You can take payments quickly and easily without your customer being present. However if the customer is present you will need a card reader that can perform a ‘chip and pin’ transaction.
  • You don’t need to invest in expensive point of sale software or traditionally expensive credit card terminals. If you don’t sell anything in person you don’t even need to invest in a cash drawer.
  • There is more freedom and flexibility – transactions can be carried out anywhere and anytime so long as you have an internet connection.

Okay I think a virtual terminal will benefit my business. How do I know which provider is right for me?

The market is filled with virtual terminal providers; the trick is to find the right one for your business. Larger financial institutions such as banks usually insist merchants sign up to a fixed term contract (often a minimum of 12 months), a fixed monthly fee and sometimes even a per transaction fee. For example, to sign up for a virtual terminal with Barclays Bank you need to commit to:

  • A 12 month contract
  • A fee of 1.75% for Visa and MasterCard, with additional fees for American Express
  • A fixed fee of £20 per calendar month which covers up to 350 transactions
  • Further transactions are then charged at a flat rate of 10p each
  • For debit cards, an additional 1 pence is charged per transaction

For many businesses, and particularly start-ups or those with a highly variable monthly income, the concept of being tied into a contract or paying fixed monthly fees is untenable.

If you don’t want to get tied into a contract, Paypal also offer a virtual terminal that has:

  • NO contract
  • A monthly fee of £20
  • Transaction fees which could be as low as 1.9% + 20p per transaction, or as high as 3.4% plus 20p per transaction and are variable depending on the total payments processed the previous month.
  • Additional currency conversion fees and cross-border fees apply

The downside with Paypal is that your business has to process more than £1500 a month to qualify for merchant rate pricing. If you put through less than that you will be paying the higher rate of 3.4% + 20p per transaction.

To learn more, see Phone payments with PayPal – What you need to know

If monthly fees are turning you off then you could consider a provider like Payleven. Better for businesses keeping a tight rein on their month to month expenses, Payleven offers:

  • NO monthly commitment
  • NO contract
  • A terminal transaction fee of just 2.95% for every payment you process.

There is a one-off cost of £59+VAT, but this gets you a standard ‘chip and pin’ card reader meaning that you can take payments in person too.

There is a virtual terminal suitable for every business. Find yours and get ready for a whole new avenue of sales and profit. What are you waiting for?