What is a virtual terminal for processing credit cards?

Though your customers may not be able to explain what a virtual terminal is, there’s a good chance they expect your business to accept payments with one. Whether you’re an online or brick-and-mortar operation (or both), a virtual terminal allows businesses to accept payments anywhere, anytime.

Think of a virtual terminal as the digital equivalent of a physical point-of-sale (POS) system that you use to swipe cards. The difference is you don’t need specialized software or a card reader. Instead, virtual terminals let you accept payments wherever you have an internet connection, opening up the possibilities of where and how you can do business.

Find out how your business can get started easily by accepting payments online with a virtual terminal.

How does a virtual terminal work?

Virtual terminals allow businesses to accept online and offline payments. In other words, virtual terminals can handle transactions made in person, over the phone, via fax or mail orders, and/or when the customer is not present.

How virtual terminals work is relatively simple: after a customer places an order, someone who works for the business enters their card information and address details into the virtual terminal. Once the payment has been accepted and processed, the business gets paid, and the customer receives the product.

For example, with PayPal Virtual Terminal, merchants can enter a single transaction or multiple transactions with the corresponding customer details and billing information. After the merchant submits the payment, PayPal processes the transaction. If the payment is successful, the merchant is immediately credited for the amount paid.

Learn how to use PayPal Virtual Terminal.

The benefits of a virtual terminal for your business

There are many reasons why businesses use virtual terminals. Here are some of the most popular:

• Capture offline sales. Receive credit and debit card orders by phone, fax, mail, online, and/or when the customer isn’t present. You can also authorize payments, capture funds, void transactions, and issue refunds.
• Save money on hardware and software. No expensive equipment or software to install — just use your computer.
• Ship fast. If you choose PayPal as your virtual terminal, you can automatically create a packing slip.
• Receive funds fast. After the transaction is approved, the payment usually shows up in your account in minutes.
• Get reports and understand your analytics. Another benefit of using PayPal Virtual Terminal is it’s pre-integrated into all of PayPal's reporting systems so you can review and analyze your data.

Drawbacks of a virtual terminal

While virtual terminals are very convenient for small businesses, you may have some questions about the security of using one.

Unlike in-person transactions where a card reader encrypts and securely transmits payment details to your POS and payment processor, virtual terminals require manual data entry.

This means a member of your team would need to enter sensitive information like the customer’s card number, CVV, and billing address directly into the system. You would not be storing the information in your own system, so there's no need to worry about a data breach there. Instead, the information goes directly into the virtual terminal.

Although this process is less secure than methods involving physical card readers or encrypted online forms, many virtual terminals, such as PayPal Virtual Terminal, incorporate safeguards like address verification to help prevent fraud. By taking appropriate precautions, businesses can balance security with the flexibility a virtual terminal provides.

Who should use a virtual terminal?

Many businesses can take advantage of using a virtual terminal, including merchants like:

• Remote freelancers and consultants

• Travel agencies and service providers

• Professional services like law firms, marketing agencies, web development providers, or financial advisors

• Childcare providers

• Foodservice and delivery

• Restaurants

• E-commerce stores across industries

• Pet care providers

Is a virtual terminal secure for your customers?

Wondering how a customer’s credit card is protected when using a virtual terminal? Simple: virtual terminals verify a customer’s credit card and billing address to prevent credit card fraud. To process a transaction, businesses need to collect the cardholder’s name, credit card number, expiration date, CVV or security code, and billing address.

Before committing to work with a virtual terminal provider or payment provider that includes virtual terminal services, you should request information about their security practices. How is their site hosted, what information (if any) do they store, and what are their data breach procedures? Research the company’s history to see if they’ve had past issues with fraud or security breaches. If so, how did the company handle it?

PayPal Virtual Terminal — Get Started Now

Ready to accept payments anywhere, anytime? Learn more about PayPal Virtual Terminal and the fees involved. We offer a secure option for businesses to process payments via a virtual terminal online.