Virtual terminal
Virtual Terminal
A virtual terminal is an online application that allows merchants to manually process credit card transactions. This web-based tool enables businesses to key in credit card information for transactions instead of using a physical card reader.
How Virtual Terminals Work
Virtual terminals function as online interfaces that facilitate the manual input of credit card information by merchants. Here's a step-by-step overview of how virtual terminals typically operate:
Merchants log into a secure web portal provided by their payment processor. This portal serves as the gateway for accessing the virtual terminal and initiating transactions.
Upon logging in, merchants are prompted to enter the customer's credit card details, including the card number, expiration date, and CVV code. This information is crucial for authorization and settlement.
The virtual terminal securely transmits the entered credit card information to the payment processor for verification and authorization. This process involves encrypting the data to protect it from unauthorized access during transmission.
Once the payment processor receives the credit card information, it confirms the validity of the card and checks for sufficient funds. It also performs various security checks, such as detecting potential fraudulent activities.
After the credit card transaction is approved by the payment processor, the funds are settled and transferred to the merchant's account. The settlement process typically takes a certain period, depending on the payment processor's policies.
By utilizing virtual terminals, merchants gain the ability to accept credit card payments without physically swiping the cards. This offers convenience and flexibility, particularly in scenarios where a physical card reader is not available or practical. Virtual terminals find extensive use in environments such as e-commerce websites, mail order/telephone order (MOTO) businesses, and organizations that require remote payment acceptance.
Security Measures and Best Practices
As virtual terminals involve the manual entry of credit card information and the transmission of sensitive data, it is crucial for merchants to implement robust security measures to protect both their customers and themselves from potential breaches. Here are some best practices to consider:
Ensure that the virtual terminal is accessed via a secure and trusted network. It is important to use encrypted connections (e.g., HTTPS) and avoid using public or unsecured Wi-Fi networks that may expose the transmitted data to unauthorized parties.
Train employees on best practices for handling sensitive payment information. This includes educating them about the importance of confidentiality, secure data entry, and adherence to PCI DSS (Payment Card Industry Data Security Standard) requirements.
Utilize encryption and tokenization to secure data during transmission and storage. Encryption converts the credit card information into a coded format, making it unreadable to unauthorized individuals. On the other hand, tokenization replaces sensitive data with unique identification symbols, ensuring that the original information remains protected.
Implementing these preventive measures helps minimize the risk of data breaches and enhances the overall security of virtual terminal transactions.
Related Terms
Payment Gateway: A payment gateway is a service that securely transmits credit card data from the merchant's website to the payment processor. It facilitates the communication between the merchant's virtual terminal or website and the financial institutions involved in the transaction.
Point of Sale (POS) System: A point of sale system refers to the hardware and software used to process sales transactions at physical retail locations. Unlike virtual terminals that primarily focus on online transactions, POS systems are designed for in-person transactions, supporting various payment methods, inventory management, and sales reporting.
Tokenization: Tokenization is the process of replacing sensitive data (such as credit card numbers) with unique identification symbols called tokens. These tokens have no intrinsic value and cannot be mathematically reverse-engineered to obtain the original data. Tokenization helps protect sensitive information from potential theft or unauthorized disclosure.