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What is a Virtual Terminal?
A virtual terminal, also known as a virtual payment terminal, is a software-based online system that allows merchants to accept credit card and debit card payments without needing dedicated payment hardware.
Essentially, it replicates the functionality of a traditional point-of-sale terminal but through an online platform. Merchants simply need to log into their virtual terminal account from any internet-connected device (PC, tablet, or smartphone), and they can manually enter card details provided by the customer for processing payments.
How does Virtual Terminal Work?
Virtual terminals work by providing a secure online or automated phone interface for merchants to enter customer payment details. Here is a brief overview of how they work:
1) Merchant Login
It is a login credential provided to merchants by the virtual terminal provider to access the terminal interface and initiate transactions. The login ID and password allow merchants to securely sign into their virtual terminal accounts.
Through merchant login, businesses can process card payments for orders received online, over the phone or through other contactless methods without needing physical card terminals.
2) Payment Information Input
The merchant manually enters the customer’s payment details, such as card number, expiration date, and security code. The payment details entered are not stored locally but transmitted directly to the payment gateway for processing.
Sensitive financial information is encrypted during transmission to keep it safe from unauthorised access and theft. This allows merchants to accept electronic payments without needing dedicated hardware terminals.
3) Payment Processing
The virtual terminal acts as the interface to enter customer’s payment details like credit card or bank account information. It then sends this information to the payment gateway which processes the transaction and transfers funds from customer’s account to merchant’s account if approved, thus allowing online payment collection without any physical point of sale terminal.
4) Transaction Approval
Once a customer enters their payment information on a virtual terminal to make a purchase, the transaction needs to be approved before the order can be processed.
The virtual terminal sends the transaction details to the payment processor to verify the payment details and check if there are sufficient funds available. If approved, the processor notifies the merchant who can then process the order for the customer.
5) Receipt & Reporting
Merchants can issue receipts and access detailed transaction reports via the virtual terminal dashboard. The virtual terminal receives keyboard input, mouse activity and other events from the user. It then reports all this user interaction data back to the parent terminal which acts as a controlling program.
This allows the parent terminal to be aware of everything happening on the virtual terminals and respond accordingly. It receives all user inputs and reports it back for processing. Refunds or voids can also be processed directly through the terminal.
Security Features of Virtual Terminals
Data security is important for any payment processing solution. Reputable virtual terminal providers incorporate security features, such as:
1) Encryption:
All payment data transmitted and stored is encrypted using bank-grade TLS 1.2 protocols as a minimum. This protects information in transit and at rest.
2) Tokenisation:
Sensitive details like credit card numbers may be tokenised or substituted with unique stand-in values to prevent exposure if data is compromised.
3) Fraud monitoring:
Sophisticated fraud detection tools analyse patterns and transactions to flag any suspicious activity in real-time.
4) PCI compliance:
Virtual terminal vendors undergo annual audits to ensure their platforms meet Payment Card Industry Data Security Standard (PCI DSS) requirements.
5) Two-factor authentication:
Extra login verification like one-time passcodes adds an extra layer of security for merchant accounts.
Notable Facts:
Merchants see an average 41% increase in total revenue after adding the ability to accept online payments
Benefits of Virtual terminal:
There are several key benefits for merchants who use virtual terminals compared to traditional card terminals:
1) No Physical Hardware Required:
Virtual terminals do not require any physical hardware resources to function as the terminals are virtual in nature and emulated through software. This allows users to access multiple virtual terminals simultaneously on a single machine.
2) Secure Transactions:
Virtual terminals allow merchants to securely accept payments for goods and services from customers. Sensitive card details are encrypted as they are entered into the virtual terminal, keeping transactions safe.
3) Multiple Payment Options:
Virtual terminals allow merchants to accept payments through multiple payment options like credit cards, debit cards,, UPI, wallets and other digital payment methods through a single integration. This provides customers flexibility in payment methods.
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Conclusion:
Virtual terminals represent a shift towards flexibility and remote payment acceptance for businesses of all sizes. They offer an affordable, secure, and scalable solution, especially for companies dealing with remote or mail orders.
By understanding “How does virtual terminals work” merchants can make informed decisions and build this technology to adopt their payment processes. Whether you run a small business or a large enterprise, the implementation of virtual terminals can lead to better customer satisfaction and operational efficiency.
FAQs
1) What is a virtual terminal?
A virtual terminal is a software-based online system that allows merchants to accept credit card and debit card payments without needing dedicated payment hardware. It provides a secure interface for merchants to manually enter customer payment details.
2) How does a virtual terminal work?
A virtual terminal works by allowing merchants to log in, and enter customer payment details which are then sent to the payment gateway for processing. If approved, the transaction is completed and a receipt can be issued.
3) What types of payment methods can virtual terminals accept?
Virtual terminals can accept most major credit and debit cards. Many also allow other digital payment methods like credit and debit cards, UPI, digital wallets, etc., providing flexibility.
4) What are the benefits of using a virtual terminal?
Key benefits are not requiring physical terminals, the ability to securely accept payments remotely, support for multiple payment options and convenient digital payments.
5) Can multiple virtual terminals be used on one machine?
Yes, as virtual terminals are software-based, a single machine or user can access multiple virtual terminals simultaneously without physical hardware restrictions.
