87% of the UK population made online purchases in 2020 (Statista report). Whenever you purchase goods online, you are directed to a payment checkout page to complete the transaction. Whilst customers see a checkout page, merchants see a virtual terminal. In this article, we discuss all about virtual terminals, including the types of virtual terminals available and their characteristics.
A virtual terminal is a webpage that enables merchants to insert payment information on behalf of their customers. Think of a physical terminal at a shop- merchants use an online system to insert the type of product you want to purchase, the amounts, offers and extras. This helps them to calculate the total amount to pay, to keep the product inventory in check, and also to give your customers more details about their order. Once the merchant is done adding all the information, customers can insert their card into the card reader and finalise the payment.
Much like a physical terminal, a virtual terminal is a webpage that merchants can use it to add information about the order, to charge customers and even to create recurring payments. However, when doing this virtually, merchants are also responsible for adding the payee’s details and therefore initiating the payment (with the customer’s consent). In this case, customers provide the merchant with their payment details and agree to being charged beforehand.
These types of platforms may also connect to your accounting software and other payment tools, making for more optimised operations. They are ideal for B2C businesses that operate online and require remote billing.
The most common type of virtual terminal is a webpage where merchants log into their accounts from an internet browser, either using their mobile phones or computer (Windows or Mac). However, virtual terminals can also be accessed through apps on a smartphone or tablet, or through a screen on a physical card machine. In some case, you may be able to use your terminal both virtually and in-person. This depends on the payment provider/s you choose to connect with. Your PSP will give you access to a virtual terminal, which you can then use in multiple ways (through a web page and app, for instance).
Firstly, the customer/cardholder needs to express consent for that payment. This is particularly important when using virtual terminals, because merchants are responsible for initiating the payment. Not only do customers need to agree to the transaction, there also needs to be tracked record of these communications. If merchants can’t prove that the customer has agreed to that payment, they may have to refund the customer if a chargeback occurs. Since customers aren’t the ones to manually insert their details and initiate the payment, chargebacks pose a bigger risk.
Virtual terminals also involve stricter security rules, as keyed payments are more prone to fraud. In a few words, keyed payments are card-not-present transactions in which merchants don’t have the physical card with them, but they have the keys to the card number, expiration date and other codes. This type of payment runs a higher risk of fraud because the person initiating the payment isn’t the cardholder, nor do they have access to the physical card.
Usually merchants are requested to comply with PCI-DSS regulations, which may come with additional costs. However, most PSPs are already PCI-compliant. Transaction fees may be higher than other types of online or in-person transactions because of the higher risk of fraud. This is something that you need to check with your PSPs, as each payment provider charges differently. Overall, the main difference between virtual terminals and other online payments is that, through virtual terminals, merchants initiate the payment on their own screen, and customers don’t have access to it.
Imburse is a cloud-based middleware connecting large enterprises to the payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using a variety of payment technologies and providers around the globe.
In a world where consumers payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment requirements. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team below should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.
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