Payway Blog

Payment Gateway vs. Virtual Terminal

September 9, 2020 at 3:41 PM / by Mary Caldiero

Selecting the right payment processing solution can be confusing. One of the most common misconceptions is understanding what the difference is between a payment gateway and a virtual terminal.

The primary difference between a virtual terminal and a payment gateway is that a payment gateway is typically used for online transactions, which means there’s a customer facing interface. If you want your business to accept online payments with ease, you’re going to want a payment gateway. No matter if your business utilizes a payment gateway on your website or if you redirect customers offsite to complete the transaction,  the gateway is the thing that supports the transaction of money from one account to another.

A virtual terminal is not customer facing and typically used by merchants only. It allows store owners to manually key in credit card numbers when they receive phone or invoice orders. They are accessible through your payment processor’s website or mobile app and is just another way you can accept credit cards. They do not require any special equipment.

What's best for my business? 

Each solution offers its own advantages. A secure payment gateway allows merchants to accept credit cards, debit cards and ACH payments online. It also enables recurring billing, accounting software integration and more.

A virtual terminal simplifies the payment process for mail order and telephone order sales, as well as off-site sales events. There may be times when it is extremely helpful for you as the merchant to have the capability to manually enter customers’ payment information. This could happen if the buyer has trouble with your online shopping cart. Or perhaps someone wants to purchase one of your products over the phone simply by providing you with a credit card number and expiration date. At times like this, you would lose a sale if you did not have virtual terminal in place.

However, it should be noted that generally interchange fees are higher for Card Not Present (CNP) transactions because the chance of fraud and chargebacks is higher without the card present. Also, you will need the manpower to process transactions via a virtual terminal since it requires  someone to manually enter the cardholder information. Without the manpower and the time, a virtual terminal does not make sense.

Depending on your business model, it may make sense to use both means of accepting credit cards. Payway’s Payment Solution offers you the choice of implementing a payment gateway, virtual terminal or both.

Mary Caldiero

Written by Mary Caldiero

Mary Caldiero is Director of Performance Marketing at Payway. She is responsible for driving consistent, cost-effective new customer growth as well as creating marketing retention strategies.

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