Virtual Terminal

A web-based application that allows merchants to manually enter credit card information and process transactions through a computer or mobile device without a physical card reader, commonly used for mail order, telephone order, and invoice payments.

Virtual terminals enable merchants to accept card-not-present payments by manually keying in transaction details through a secure web interface. This payment method is essential for businesses that take orders over the phone, process mail orders, send invoices, or need to accept payment from customers who are not physically present. The merchant logs into their payment gateway's virtual terminal, enters the customer's card number, expiration date, CVV code, billing address, and transaction amount, then submits for authorization.

Virtual terminals function identically to physical card terminals from a processing standpoint, connecting to the payment gateway and card networks to obtain authorization and settle transactions. However, because card information is manually entered rather than read from a physical card, these transactions are classified as card-not-present and qualify for higher interchange rates. Merchants using virtual terminals should always collect the full billing address (for AVS verification) and CVV code to qualify for the best available card-not-present rates and reduce fraud risk.

Common use cases include service businesses invoicing clients after work completion, B2B companies processing purchase orders, professional services accepting retainers or deposits, nonprofits processing donation pledges received by phone, and businesses accepting payments for large purchases arranged by phone or email. Most payment processors and gateways provide virtual terminal access as part of their merchant account packages, either included in monthly fees or available for a small additional charge (typically $10-$25 per month). Key features to evaluate include ability to save customer payment profiles for recurring charges, invoicing capabilities with payment links, transaction limits and velocity controls, mobile browser compatibility, and reporting and reconciliation tools.

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Related Terms

3D Secure

An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.

ACH Payment

Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.

Acquirer

A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.

Address Verification Service (AVS)

A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.

Aggregator

A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.