We constantly get calls from business owners complaining about the cost of payment processing.
Whether it’s interchange fees, markup, equipment rentals, or something else altogether, the fact of the matter is payment processing can cost business owners a lot of money, and they are not happy about it.
Unfortunately, part of the reason for this is that most merchants are not well-versed in how our industry works. For the most part, they’re unfamiliar with smaller, local providers like us, and they’re otherwise unaware of their options for processing payments.
As a result of this lack of awareness, many business owners simply get their payment processing done by whatever bank they’re already with, or just pick a provider at random and call it a day.
But if this is how you’re picking a payment processor, you’re probably not going to save any money, and you’re much more likely to get taken advantage of in this situation.
However, there are ways to save a significant amount of money on your payment processing, but you have to know what to do and where to look.
With that in mind, we figured we should publish an article detailing a little-known strategy that can save some merchants quite a bit of money.
So, if you’re thinking about using a virtual payment terminal, or you’re just sick of paying so much for your payment processing, and you’re wondering what you can do to alleviate some of that burden, then you’re going to want to keep reading.
Because in this article, we’re going to explain what a virtual terminal is, how it can benefit your business, and how you might be able to use it to cut the cost of your payment processing.
What Is a Virtual Payment Terminal?
A virtual payment terminal is a type of server where merchants can log in to process credit and debit card payments without needing a physical payment terminal or card reader.
It’s typically accessed through a web browser and provides a secure platform for merchants to enter and process payment card information manually.
This allows customers to give their card info to the merchant, who can then enter the details into the virtual payment terminal, which securely processes the payment and verifies that the transaction is authorized.
The payment is then processed through a payment gateway, which securely transfers the payment information to the merchant’s payment processor for approval and settlement.
How Can a Virtual Payment Terminal Benefit My Business?
As we mentioned above, there are several strategies you can use to save money on payment processing, and one of the ways you can do this is with a virtual payment terminal.
This isn’t going to be true for every industry or business, but there are many circumstances where business owners can cut the cost of their payment processing by using a virtual terminal.
With that said, below, we’ve listed some of the situations where a virtual payment terminal might be able to save you money, and explored some of their other benefits, as well.
One of the benefits of virtual terminals is that they’re very versatile.
Not only can they process many different forms of payment, including credit, Visa Debit, and more, but they can also be used on pretty much any device.
A virtual terminal is also very convenient for subscription services like gym memberships because you can input a customer’s credit card info once and then set the terminal to bill them the same amount each month, which can end up saving you a lot of time.
Moreover, a virtual terminal can also be accessed by multiple users simultaneously. The only thing is you can’t have multiple users processing transactions at the exact same time.
It’s important to point out that virtual terminals have all the same security features as their physical counterparts, minus the chip and PIN that would be used with an actual credit or debit card in person.
That being said, payments processed through a virtual terminal are really no different from any other form of card-not-present transaction, such as shopping online or over the phone.
However, business owners have to keep in mind that because virtual terminals can only process card-not-present transactions, they are inherently less secure, and so the interchange fees you’ll pay on those kinds of transactions will be higher.
But depending on how your business operates, a virtual payment terminal could still save you money on your payment processing, in spite of these higher fees.
If you want to learn more about what interchange fees are, and why they’re more expensive for card-not-present transactions, you should check out our article on What You Need to Know About Interchange Rates in Canada.
If you own a business that has several different locations, a virtual terminal allows you to have one single terminal, instead of having to pay for a separate terminal for each location.
This means you can have one login for the terminal, and then assign what’s known as a merchant identification number (MID) to each location, which just makes things more convenient and organized, as employees at each location can log in to their own MID, which only pertains to them.
This can also help cut the cost of payment processing because if you have one location in Toronto and another in Vancouver, for instance, there’s no feasible way to use a single payment terminal for both locations.
But with a virtual terminal, every location can use the same terminal, and depending on how many locations you have, this could save you a lot on rental fees for physical terminals.
Now, depending on the nature of your business, you may have to pay for the mobile data that’s required for your employees to run the virtual terminals on their phones, as well, so that’s something else you’ll have to consider.
Even still, many businesses can save a significant amount of money on terminal rentals, even with the higher interchange fees and data costs.
At the same time, if you and your employees are processing payments on the go, then a virtual terminal could provide a cheaper alternative to mobile terminals.
This is because mobile terminals have a data allowance on them, and if you go over that by processing too many payments, then you’re going to get charged extra fees.
So, if your business is processing a ton of payments with mobile terminals, then a virtual payment terminal might provide you with a considerably cheaper option.
Peace of Mind
Our VP of Operations, Steven, used to work as a waterproofer, and his old boss never needed to process credit transactions until recently, so we signed him up.
But rather than have him pay $60 per month to rent a physical terminal, which he’d also have to cart around with him, we got him set up with a virtual terminal, and that allows his daughter to come to his house once a week and bill all his customers, so he doesn’t have to be bothered chasing them around with a payment terminal.
More importantly, a virtual terminal gives him a great alternative to checks, which are a very risky form of payment, and this allows him to avoid all the headaches, penalties, and uncertainty that tend to go along with this sort of thing.
You see, one of the main reasons why he chose to use the virtual terminal system is that he used to have to put liens on buildings he was working on because the people who hired him would give him a check, which would bounce, and then they’d stop answering the phone when he called them.
But the use of a virtual terminal stops this from happening because the transaction won’t go through if the funds aren’t there.
Now, there is still a chance that someone could try to use a stolen or fraudulent credit card, but nine times out of ten, the processor will identify that card and stop the transaction before it’s too late.
Credit card transactions are also a much quicker form of payment than a check, which means you won’t be waiting around to find out whether you’ve been taken advantage of.
For instance, if someone gives you a check, you might get it on Saturday night, but you won’t be able to deposit it until Monday morning, and then it takes a day to clear, so by the time you find out it’s bounced, several days may have passed.
That being said, compared to checks, this form of payment offers a much lower chance that someone can pull these kinds of scams on you, and if someone does try to scam you, you’re going to know much sooner than you would if you were paid with a check.
So, if you’re a contractor, own a business that operates in the skilled trades industry, or have otherwise been accepting checks as a form of payment, then a virtual terminal could give you much greater peace of mind and protection against fraud.
Are you thinking about using a virtual payment terminal for your business, but you need more information? Give us a call today to learn more about what we can do for you.