Virtual Terminal vs Payment Gateway: Which Do You Need? [2022]

Our business expert explains the differences between a virtual terminal and a payment gateway. Understand what each one does and learn which one you need.

While we often hear the terms ‘payment gateway’ and ‘virtual terminal’ used interchangeably, these phrases actually describe two different parts of the online payment process.

Understanding the flow of your merchant transactions can help you avoid unwanted charges and offer your clients a better checkout experience. Whether you're new to selling online or simply want to learn more about your merchant account, we dive into the distinctions between virtual terminals and payment gateways in this detailed guide. 

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What Is a Payment Gateway and How Does It Work?

A payment gateway acts as the customer-facing part of an online transaction. You might think of it as the online version of a classic checkout counter. Through the gateway, you can accept a variety of payment methods from your customers, including credit cards, debit cards and digital wallets like Apple Pay and Google Pay. 

You can incorporate this virtual point-of-sale terminal into your website or send your customers direct links so they can pay through the gateway.

When a customer makes a purchase, they can enter their credit card details online. The payment gateway swaps the digits for encrypted tokens that shield sensitive data during transmission, then sends the information to the payment processing provider

The processor transmits the transaction info to the customer's bank, called the issuing bank, to approve or decline the purchase. You and your customer will receive this info and complete the transaction accordingly.

What Is a Virtual Terminal and How Does It Work?

Unlike a customer-facing payment gateway, a virtual terminal is a dashboard where you can see the "back end" of transactions processed through your merchant account. 

As long as you have an internet connection, you can log into your virtual terminal on any device to enter customer credit card information and facilitate transactions. Usually, you'll access the terminal through your standard web browser.

Many modern virtual terminals have high-tech features that improve convenience for you and your customers. You can automate collection for payments that didn't go through, create repeat transactions for subscription services, take advantage of fraud prevention tools, validate purchases in real-time, and download reports to analyze performance metrics. 

What Does My Business Need, a Payment Gateway or a Virtual Terminal?

Each of these components has advantages in certain situations, which means your business may need both to process online transactions efficiently. 

Payment gateways provide an easy option for ecommerce, while virtual terminals streamline in-person sales. They're particularly useful for companies that set up shop at local events and festivals, since you can accept credit and debit cards anywhere. 

The Benefits of Using Pay.com as Your Payment Service Provider

Pay.com provides both these aspects of payment processing in one easy-to-use solution. You'll get your own Virtual Terminal as well as the Pay Checkout payment gateway, all managed through your intuitive Pay Dashboard. 

Even if you're new to the e-commerce landscape, you'll be able to set up your account in just a few minutes and start accepting payments right away. Pay.com supports a wide range of payment options so you can cater to your customers with their preferred methods.

The Bottom Line 

Simply put, customers submit data through payment gateways while virtual terminals are designed for merchant use. You can take the guesswork out of accepting online payments when you partner with Pay.com.

We put all the latest features in one place so you can manage ecommerce transactions without shifting focus from your core business needs. In addition, our flat-fee structure means you'll know what to expect from your merchant services bill. Click here to get started now!

FAQs

How can my business accept credit card payments?

You can take credit card payments along with other payment methods with Pay.com. We offer several ways for your customers to pay, including secure Pay Links. Your Pay Dashboard includes a Virtual Terminal, and also lets you set up a checkout page on your website. 

Click here to sign up for Pay.com.

What does a virtual terminal do?

A virtual terminal is an online dashboard where you can manage all your merchant account transactions. You can manually enter customer payment information as well as get reports about your sales, see the status of pending transactions, and stay on top of your business's ecommerce and in-person activity.

What's the difference between a payment gateway and a payment processor?

The payment gateway is the customer-facing part of the payment system. When your customer enters their payment information, the payment processor then transmits the submitted data from the payment gateway to the customer's bank, which determines whether they have the funds to complete the purchase.

What should I look for in a payment service provider?

Your payment service provider should offer high-level security to keep your customers and your business safe. You'll also want a provider that has transparent, easy-to-understand fees so you won't get any billing surprises. Pay.com makes it simple to set up a stress-free payment system with powerful customization features to personalize the process.

Meet the author
Andrea Miller
Andrea Miller has been a writer and editor for more than two decades. Specializing in business and finance, she has written for some of the major websites in the financial sector. Outside of work, she spends most of her time with her family and enjoys hiking, yoga, and reading.
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