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Merchant services: Virtual terminals: how do they work, and who are they suitable for?

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A virtual terminal is a great way to process credit card payments in “card-not-present” situations, for example over the phone or via mail order (Moto transactions). It can also be used in store as well as off-site. Virtual terminals are simple to use and don’t require any specialist equipment, only an internet connection. They are secure, for both the customer and the business owner, and affordable.

Set up and use

Virtual terminals are available through most merchant account and payment gateway providers, such as Barclays, Web Merchant or PayPal. They can of course be combined with other services (in-store PDQ machines, online payment gateways, etc.) to cover all the needs of businesses which operate online as well as through physical stores.

To process payments, merchant users need to follow three simple steps:

- They must create an account with the merchant account provider of their choice;

- Then, they log into a specialized software or a web application;

- Finally, via a personal computer, phone or tablet, they fill an online form with the credit card details provided by their customer.

Card details are transferred through a payment gateway and the availability of funds is verified. In an instant, payment is received by the user’s merchant account. After a fixed period of time, the funds are transferred to the user's business account. On the customer’s side, automatic invoicing and receipt generation are common options.

 Virtual terminals

Benefits of virtual terminals

A virtual terminal has several advantages:

- The payment process for Moto transactions is simple and fast;

- No additional hardware (a PDQ machine, for instance) is necessary;

- It's essential for businesses that don't process transactions in person (service providers, bed and breakfasts, contractors) but still want to offer mailed or called in payment by credit card;

- Batch processing, where the merchant user can upload multiple transactions at once, is a convenient option, as is the possibility to schedule recurring payments;

- It's particularly appropriate for businesses without a permanent base, or for off-site events, such as conferences, markets, etc.

Safety and costs

Although customer data can be stored for future use, card details are never retained when using virtual terminals. This makes payment through a virtual terminal secure, and avoids any data breaches. Furthermore, businesses that offer this service aren’t at risk of violating PCI compliance regulations.

There are no set up fees, and most of the time no monthly fee either. In general, the merchant user only pays a transaction fee, usually around 2.75% of the processed amount. For businesses which don’t process large volumes of payments, a “pay-as-you-go” service is offered by the majority of providers. This allows business owners to use their virtual terminal on an ad-hoc basis.

As far as credit card payment is concerned, virtual terminals may be the solution a lot of store owners, online merchants or independent contractors are looking for: they are versatile, mobile, secure, and reasonably priced.

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