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Virtual Terminals and Phone Payments Processing

Virtual terminalVirtual terminals. You’ve heard about them, maybe even used one.

But be honest

Can you confidently say that you know what they are, how they work, and who the best providers are in the UK?

If you answered no to any of the above, then you need to keep on reading.


In this guide you will find


Picture this: someone asks you to define ‘Virtual Terminal’, and I’m guessing you’d say it’s an online payments processing system for businesses. You’re not wrong! But that statement is a dangerous oversimplification of virtual terminals and their functions.

For example, it doesn’t tell you how your transactions are kept secured or how your customers’ credit card information is protected. Yes, providers of virtual terminals offer security features, but they vary in amount of risk reduced and PCI (Payment Card Industry) compliancy.  

Right now you’re probably starting to second-guess everything you know about virtual terminals.

Don’t worry; we’ve got you covered!


PayPal virtual terminal

When you’ve finished reading, all of your questions will be answered and you’ll be able to call yourself an expert on virtual terminals.

Here’s a brief summary of what’s in this guide:

  • Virtual terminals are a secure, online version of credit card terminals, and are hosted on the servers of your chosen service provider.
  • Check that your virtual terminal provider includes sufficient data encryption technology that protects your customers from fraud.
  • Consider using virtual terminals if your business accepts payments that:
    1. Are not always done in person with the customer present,
    2. Are not exclusively e-commerce,
    3. Are not always made in your business’ physical location.


How Do Virtual Terminals Work?


There’s no denying it – technology is changing the world. It is dramatically altering the way you interact with your customers and how you conduct business. Therefore, it’s your job to stay well informed on the newest technology, and our job to equip you with the necessary knowledge.

We’ve established that you have a general understanding of what a virtual terminal is: an online payments processing system for your business. But deep down you know that it’s too vague of a definition, as it leaves you with even more questions about virtual terminals.


PDQ terminal GIF

A virtual terminal is an online version of a PDQ machine


Let me clear things up for you.

Virtual terminals are software applications that host an online version of credit card terminals, and sometimes POS systems, on the servers of the provider.

They enable your business to efficiently process electronic transactions without the physical presence of your customers or their credit or debit cards. What’s more, they work in practically the same manner as physical credit card machines:

  • You enter in a customer’s card information and transaction details into the virtual terminal’s online payment form.
  • The virtual terminal encrypts and processes this information, then transmits it for authorization.
  • You receive an authorization response when the payment has been successfully processed into your merchant account, and eventually your business bank account.
  • The transaction is recorded, and you have the option to email/print a receipt for your customer.

The simplicity of the virtual terminal’s transaction process isn’t even its best feature. Get this: all you need to access the virtual terminal is an Internet connection and a computer/tablet/smartphone. What this means is you can conduct your business from virtually anywhere! Once you have an established Internet connection, your electronic device becomes your credit card terminal in which you can easily process transactions.

Fact: A virtual terminal eliminates the need to invest in expensive equipment such as mobile PDQ machines.

Before we go any further, allow me to clarify the difference between virtual terminals and payment gateways.

While both process electronic transactions, only you (the merchant) can access virtual terminals in order to charge your customers. Payment gateways are used for businesses such as e-commerce, where the customer enters their card information and charges their own card. Further in this guide, we will cover examples of use cases and what types of businesses are suited for virtual terminals.


How Information Is Kept Secure on Virtual Terminals


As a business owner, it’s your responsibility to maintain secure transactions and ensure that your customers’ card information is protected from fraud.

Now I know what you’re thinking: do virtual terminals carry risk of credit card fraud, since all the data and transactions are processed online?

Yes and no. Let me explain what I mean by this.

All credit card machines, both physical and virtual, carry some risk of credit card fraud. The fact that virtual terminals process payments online doesn’t increase or decrease this risk.


Thankfully, there is a solution.


Virtual terminals, like credit card machines, all have encryption technology that protects cardholders and merchants from theft. But the encryption technology they have differs between providers, and it is up to you to decide which one suits you best.

What is encryption technology? It’s simple; when you key-enter or swipe a card, the data is instantly converted into a unique code, which prevents it from unauthorised access.

There are two categories of encryption technology solutions:

  • Non-Validated P2PE and,
  • PCI-Validated P2PE.

Non-validated P2PE encryption solutions have not been validated by the PCI (Payment Card Industry), who provides a comprehensive security framework that contains extensive measures to ensure the security of credit card data.

Although non-validated P2PE (Point to Point Encryption) solutions offer data encryption, you have no way of knowing whether the provider has fully complied with the security framework set by the PCI.

However, this does not mean that all non-validated P2PE solutions aren’t as good as PCI-validated solutions. Their difference is that the PCI has not properly assessed the non-validated solutions in order to give them validation.

This could either be because they have yet to complete the assessment, or because they are lacking an important security feature. If you’re using a non-validated solution, you’d better hope that it’s not the latter!

Beware: small businesses are often unaware that the data encryption solution they are using is non-validated, as it tends to be cheaper than PCI-validated solutions.


Do You Need a Virtual Terminal?


It may surprise you to learn that the use of virtual terminals isn’t limited to MOTO (mail order or telephone order) businesses anymore.

Essentially, any business that needs to accept payments in a non-physical environment and isn’t exclusively e-commerce, can benefit from virtual terminals.

Businesses that use virtual terminals are ones that:

  • Accept mail or telephone payments,
  • Accept payments at conferences, stalls, or events,
  • Deal with a service-related industry.

Virtual terminals eliminate the need to rent expensive PDQ machines and allow you to easily charge transactions to your customers.

Here are some examples of businesses, card-present and card-not-present, that use virtual terminals:

  • Gyms
  • Law Offices
  • Contractors such as electricians, plumbers
  • Healthcare providers
  • Hair and Nail Salons
  • Call Centers

As you can see, it’s not just MOTO businesses that use virtual terminals. The benefits of charging your customers online extend to many industries.

One of the virtual terminal’s most attractive features is its ability to automatically process recurring payment plans.

These payment plans are designed for businesses that need to charge a customer a pre-determined quantity for a certain number of times until the final payment has been completed. For example, companies with membership or installment plans.

You can effortlessly set up recurring payment plans on your virtual terminal by first, creating a customer profile. This should contain their card information as well as the details of their payment plan, such as when and how much they will be charged, as well as the final date of payment. Your virtual terminal will then automatically process the payments at the agreed-upon dates, until the final payment has been made.

Bottom line: you would never have to manually enter in card information and repeatedly charge the customer each month, saving you plenty of time and effort!


Best Virtual Terminal Providers


Luckily, all major virtual terminals from different providers are transparent in that they include the same features, which greatly reduces the possibility of you overpaying for one.

But you still want to make sure that you get the best virtual terminal for the needs of your business, and we’re here to help you find the one.

We’ve put together a table with all the key characteristics of the top providers of virtual terminals in the UK. This will make it easier for you to judge if the provider’s services are in line with your business type, and whether their fees and customer support meets your expectations.


Provider Features
  • No contract
  • £20/month plus transaction fees
  • Additional currency conversion and cross border fees
  • Transaction fees vary depending on how much your business processes
    • 3.4% + 20p if your business processes less than £1,500/month
    • 2.9% + 20p if your business processes £1,500.01-£6,000/month
    • 2.4% + 20p if your business processes £6,000.01-£15,000/month
    • 1.9% + 20p if your business processes £15,000.01-£55,000/month
    • If your business processes more than £55,000.01/month, the transaction fee can be negotiated.
  • All major debit and credit cards accepted
  • Customer support is not available 24/7
  • PCI DSS Compliant
Secure Trading
  • No contract
  • £10/month for 100 transactions, 10p for additional transactions
  • 2% credit card transaction fee
  • 25p debit card transaction fee
  • The virtual terminal is automatically integrated into their payment gateway service, which you can use at no further cost
  • All major debit and credit cards accepted
  • PCI DSS Compliant
  • 24/7 telephone support
  • Offers products and plans tailored for SMEs or large international corporations
SumUp (formerly Payleven)
  • No contract
  • No monthly fees
  • 2.95% + 25p transaction fee for all payments
  • One-off cost of £59 + VAT, which gets you a standard Chip and Pin card reader to take payments in person as well
    • Unable to solely purchase the virtual terminal
  • Free delivery, iOS/Android App, reporting, and telephone/email support
  • All major debit and credit cards accepted
  • £15/month for 100 transactions
  • Real-time payment authorization and reporting
  • Ability to export data into Excel
  • Solutions for corporate clients and small businesses
  • All major debit and credit cards accepted
  • Accepts over 25 currencies
  • 2-2.5% transaction fee for credit cards
  • 10-20p transaction fee for debit cards
  • 24/7 telephone and email support
  • PCI DSS Compliant


All in all…

Virtual terminals have a multitude of applications and the top providers will offer you the best security features. Their offerings have become more attractive to a wider range of businesses beyond MOTO ones, and when paired with the right provider, can lead to more efficient business practices. Understand what type of plan suits your business, and be sure to request competitive rates from your chosen provider.

Congratulations! You’ve made it to the end and can now call yourself an expert on virtual terminals. So take the next step: get yourself set up with a virtual terminal, and let us know how it goes.


Filwood Green Business Park
1 Filwood Park Lane

0800 234 3036