Best Virtual Terminals for Small Business of April 2023

How do virtual terminals work?

After setting up an online account with your payment processor, you’ll log in and navigate to the virtual terminal. There, you'll enter a customer’s credit card information into an online form, submit the transaction for processing, and receive payment.

The exact information needed varies, but generally transactions require the following:

• Card number.

• Expiration date.

• CVV/CVV2 number (the three- or four-digit number on the back of a card).

• Customer name.

• Billing ZIP code.

There may also be an area on the screen to write a note to the customer, as well as an option to email or text a payment confirmation.

Processing fees are deducted from the payment before the transaction funds are transferred to your business account.

» MORE: How to accept credit card payments over the phone

How much does a virtual terminal cost?

Depending on the pricing model used by the processor, a virtual terminal could include some of the following fees:

• Monthly fee.

• Terminal fee.

• Processing fees.

• Interchange fees.

• Margin fees.

• Assessment fees.

Regarding processing fees, remember that card-not-present transaction fees are higher because they are considered to have a greater potential for fraud.

How much you will pay each month depends on the processor you select and your volume of credit card transactions. For example, one processor may require a monthly fee of $25 and charge 2% plus 10 cents per transaction, while a competitor that doesn’t require a monthly fee may charge a higher transaction rate of 2.5% plus 20 cents.

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What businesses use virtual terminals?

Businesses that accept payment information from customers who are not physically there — card-not-present transactions — use virtual terminals. It’s also an option when a mobile terminal is required or when customers prefer contactless payments.

Businesses that use virtual terminals include:

• Mail-order and telephone-order businesses, also called MOTO businesses.

• Restaurants, diners and cafes that process phone and online orders.

• Delivery-based businesses such as food and beverage stores, florists and gift shops.

• Mobile businesses such as food trucks, pet groomers and photographers.

• Freelancers such as web designers, artists, SEO specialists and bookkeepers.

What to look for in a virtual terminal

If you already have a point-of-sale system for your business and you want to add a virtual terminal for limited use, then your best option would generally be to use your existing provider. However, if more than about a quarter of your transactions are entered manually, a payment processor that offers a robust virtual terminal could be a smart choice.

Price

The cost of credit card processing is important when evaluating your options. There are a variety of pricing models, such as flat-rate, interchange-plus and membership plans. Because each payment processor has different pricing, it’s not easy to make a quick side-by-side comparison.

You can get a good idea of the cost of each plan based on your volume of manual transactions. Start by estimating the number of manual transactions you do each month and the total dollar amount. Next, based on the processor's pricing model, calculate how much you would be charged for your transactions. Finally, add in any additional fees the processor charges to get your total expense for the month.

For example: Say a processing service charges $100 monthly to use its platform, and its virtual terminal option is free. Its processing fees are 2% of the transaction total plus 10 cents per transaction. If you do about 80 manual transactions a month for a total of $4,000, you would pay the monthly fee of $100 and processing fees of $80 (2% of $4,000) plus $8 (10 cents x 80 transactions) for a total of $188.

A company with a high volume of phone orders could benefit from a membership-based model with lower processing fees, while a business that does a small volume of phone orders may pay less with a flat-rate model and no monthly fee.

Other factors to consider

• Payment speed. You want to get your money quickly from your transactions — ideally the next business day, with an option for the same day. If there’s a fee for same-day payments, remember to add that into your calculations.

• Customer support. At a minimum, you want support available during the hours you'll be submitting transactions. Getting 24/7 support is ideal.

• Integration with other apps. It will save you time if your virtual software works with your accounting software. If a third-party service is necessary for integration, add that fee to your calculation.