A virtual terminal is an online application that allows businesses to accept payments from their customers by credit card, debit card or e-check. It functions as a software interface that connects to a payment gateway, allowing merchants to process transactions remotely without the need for physical terminals.
When a customer makes a payment through a virtual terminal, the payment information is securely transmitted to the payment gateway, which then verifies the customer’s details, checks for available funds, and either approves or declines the transaction. The funds are then transferred to the merchant’s account within a few business days.
Here are the general steps involved in using a virtual terminal and how it works:
- Access the virtual terminal: The merchant logs in to the virtual terminal application with their username and password.
- Enter payment details: The merchant enters the payment information provided by the customer, such as the card number, expiration date, and CVV code, or the customer’s bank routing and account numbers if paying by e-check.
- Verify customer information: The virtual terminal sends the payment information to the payment processor or acquiring bank, which verifies the customer’s identity, checks for available funds, and runs fraud checks to determine whether the transaction should be approved or declined.
- Process payment: If the transaction is approved, the payment is processed and the funds are transferred from the customer’s account to the merchant’s account.
- Record transaction details: The virtual terminal records the transaction details, including the amount of the transaction, the customer’s information, and the transaction status, for future reference.
- Send receipt to customer: The merchant can choose to send a receipt to the customer by email, text message, or print a paper receipt if the customer is present.
To connect to a merchant account, a virtual terminal typically requires the merchant to create an account with a payment processor or acquiring bank. The payment processor or acquiring bank will then provide the merchant with a merchant identification number (MID) which will be used to connect the virtual terminal to the merchant’s account.
Virtual terminals are a convenient way for businesses to accept payments, especially for those that don’t have a physical storefront or need to accept payments remotely. However, there are also some risks associated with using virtual terminals, such as the potential for fraudulent transactions, data breaches, and chargebacks.
“Card-not-present” refers to any type of transaction where the merchant does not have access to the physical credit card, such as online purchases, mail order or telephone orders, and payments made through virtual terminals. Since the merchant is not able to verify the cardholder’s identity or physically verify the card, card-not-present transactions are generally considered higher risk, and are subject to additional security measures such as AVS (Address Verification System) and CVV (Card Verification Value) checks.