Editor’s note, this post was originally published in October 2013. It has been updated and revised for accurateness and completeness.

You’re probably familiar with the credit card reader used heavily for taking payments by retail and food/restaurant businesses. While these card readers work well with the retail business model, if a business isn’t processing payments in person (often businesses that provide a service) they may have some limitations. If you need to collect information that will help you build relationships with your customers over time, an online virtual terminal might be the best choice.

example of a virtual terminal

With Google Checkout and WePay’s virtual terminal off the map, service-business owners are hard-pressed to find a solution that’s cost effective and flexible enough to work with their businesses.

So why are virtual terminals vital to a business that provides services?
They give accountants, lawyerschiropractors, gym owners, contractors, consultants (and the list goes on) the ability to accept credit cards from a mailed or called-in payment at a reasonable cost to their business.

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Process Mailed or Called-in Payments at Lower Rates


For retail businesses, using a physical credit card reader is often the most cost-effective option for processing credit cards; ‘card present’ transaction rates are typically 50 to 100 basis points lower than ‘card not present’ rates. However, if a transaction is keyed-in on a credit card reader that is set up to accept swiped/dipped payments (on a card-present merchant account) it will yield a much higher ‘non-qualified’ rate and a high cost for the business.

Since not all businesses need to or want to charge physical credit cards, using a virtual terminal is a great alternative. It not only allows you to process mailed and called-in payments with ease, but your merchant account will be set up to accept ‘card not present’ transactions at a qualified rate often a full percentage point lower than a non-qualified rate on a card reader, which can save merchants hundreds (or thousands) of dollars every month.

Processing a payment on a virtual terminal is as simple as logging in to your account and typing in the credit card information. Once you submit the payment, the transaction is processed and funds are deposited in the business’ bank account in 2-3 business days. For businesses that accept and process payments remotely, an online virtual terminal is a necessity.

Set Up Recurring Credit Card Payments


There are other advantages of virtual terminals:

One of the biggest advantages of online virtual terminals over physical card terminals is that many include recurring payment functionality. Simply enter the credit card information, set a recurring payment date, and let the virtual terminal do the rest. For businesses that rely on recurring payments, tracking down members or clients each month to get their payment information can be a struggle. If you’re currently using a card reader to process payments, you’re likely familiar with this issue. By making the switch to a virtual terminal, you’ll enjoy the improved cash flow that recurring billing provides, all while providing a convenient service for your customers.

Securely Store Customer Data for Future Transactions

Managing your credit card and customer information is an important issue that all business owners should take into account. If you’re physically storing customer credit card information for future purposes, you might be violating PCI DSS compliance rules. By using an online virtual terminal to handle and store credit card data, you’ll be set up to comply with PCI DSS regulations. The virtual terminal provider securely stores customer data for future purchases and doesn’t put your business at risk of data breaches. The last thing a business owner wants to worry about is losing sensitive credit card information. By securely storing it in the cloud, the business can feel confident that their customers’ payment information is safe.

Bottom line: If charging physical cards on the spot isn’t a possibility for your business, either because of your business model or location, consider setting up a virtual terminal. You’ll be able to process credit cards over the phone, set up auto-recurring payments, and securely save customer credit card data for future purchases.

PaySimple is an award-winning virtual terminal provider that enables businesses that sell services to collect credit cardsACH, mobile, mailed, phone, or recurring payments easily and cost effectively. Interested in a virtual terminal?

What payment system is right for your business? Find out with our free evaluation guide.


Image Credits:
Phone Credit Card Processing by matthewSBOC, on Flickr
Data Security by Semino1e, on Flickr