What Is An Online Terminal And Why Do Merchants Need One?

The landscape of commerce has been drastically transformed in the digital age. Online payment systems are the standard. Globally, one-third of people do their shopping through eCommerce sites. In the US, that amounts to $3,428 per capita spent online.

Online terminals (sometimes referred to as virtual terminals) power various types of transactions, including eCommerce and payments made over the phone. That said, these tools are more than just a means to accept payments; they represent a comprehensive solution that integrates sales, inventory management, and customer data into a unified system.

By leveraging online terminals, merchants can enhance their operational efficiency, expand their market reach, and provide an enriched customer experience. This article covers the what, why, and how of online terminals; all a business owner needs to know to dive in and thrive.


  • Virtual terminals power various types of transactions. They act as a bridge between traditional payment processing and online payment possibilities. 
  • With seamless online payment processing, streamlined processes, and enhanced operational efficiency, online terminals simplify transactions, bolster security, and provide valuable insights into customer behavior and sales trends. 
  • Adopting this technology ensures that businesses stay competitive and remain attuned to the evolving demands of their customers.
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Understanding Online Terminals (aka Virtual Terminals)

An online terminal, often called a virtual terminal, is a web-based application that enables online payments without needing a physical credit card machine or POS (Point of Sale) system. For eCommerce companies and other types of businesses with online booking or subscriptions, it’s essential.

Key features of online terminals

Payment processing is the core feature of an online terminal, but it enables so much more. As with all digital tools, virtual terminals offer features designed to streamline processes and enhance operational efficiency. These features simplify transactions, bolster security, and provide valuable insights into customer behavior and sales trends.

Key features of online terminals include:

  1. Multi-Channel Payment Processing: Online terminals can process payments from various sources, such as credit cards, debit cards, e-wallets, and, in some cases, bank transfers. This versatility ensures that customers can use their preferred payment method, enhancing the customer experience.
  2. Integration with Payment Gateways: The terminal connects to multiple payment gateways, which are services that authorize and process payments. This connection enables the business to accept payments from different financial networks and countries.
  3. Secure Transactions: Online terminals incorporate security protocols like SSL encryption, tokenization, and Payment Card Industry Data Security Standards (PCI DSS) compliance. This security infrastructure protects sensitive payment information during transactions, building customer trust.
  4. User-Friendly Interface: They offer a straightforward and intuitive interface for the business and its customers. For the business, setting up and managing payment options is simplified, allowing for easy customization and control over the payment process. For customers, the payment process is streamlined, making it easy to complete purchases without hassle.
  5. Real-Time Processing: Online terminals facilitate real-time payment processing, which means transactions are completed almost instantly. This immediacy improves business cash flow and confirms to customers that their payment has been successfully received.
  6. Integration with eCommerce Platforms: Online terminals are designed to integrate seamlessly with eCommerce platforms and shopping cart software. This integration allows for a smooth checkout process, where the payment options are embedded directly into the online store’s checkout page.
  7. Support for Recurring Payments: Online terminals can handle recurring payments for businesses with subscription services, making them suitable for companies that offer subscriptions or need to process regular payments without requiring the customer to manually complete a transaction each time.
  8. Analytics and Reporting Tools: Many online terminals have built-in analytics and reporting features. These tools allow businesses to track sales, monitor payment activity, and analyze trends, helping them make informed decisions about their operations.

Advantages of Utilizing Online Terminals

Online terminals come with an array of advantages that simplify business operations, bolster security measures, and elevate the customer experience. The key benefits include:

Seamless convenience and accessibility

The convenience and accessibility provided by online terminals are especially advantageous for digital-first businesses. This technology empowers businesses to reach customers beyond the confines of physical storefronts and conventional operating hours, broadening their market reach and ensuring that services are available around the clock.

State-of-the-art security measures

Through online terminal technology, businesses are equipped with cutting-edge security features, including robust encryption and fraud detection mechanisms. These critical security enhancements guard against unauthorized transactions and secure customer payment data, thus protecting the business’s reputation and minimizing financial risks.

Enhanced customer experience

By integrating online payment solutions through an online terminal, businesses significantly enhance the shopping experience. This smooth and efficient checkout process is available anytime, anywhere, catering to consumers’ preferences. Such convenience simplifies the purchasing process, and fosters increased customer satisfaction and loyalty, potentially boosting repeat business.

Effortless integration with business tools

Online terminals can integrate effortlessly with a wide range of business tools, from inventory management systems to customer relationship management (CRM) platforms. This harmonious integration simplifies various administrative processes and offers deep insights into sales trends and customer behaviors. Armed with this knowledge, businesses can make strategic decisions and customize their offerings to more closely align with consumer demands, enhancing overall business performance.

Which Merchants Need a Virtual Terminal?

Virtual terminal technology is often thought of as an eCommerce solution. While these businesses may be the terminal’s biggest client base, the utilities of an online terminal apply to other business types.

eCommerce ventures

At the forefront, eCommerce businesses leverage online terminals to effortlessly conduct transactions over the internet. This tech supports many payment options and amplifies the customer’s shopping journey by melding flexibility with security, making it a cornerstone for digital commerce success.

Subscription-based enterprises

From digital content platforms to curated monthly box services, subscription-based businesses harness online terminals for streamlined recurring billing. This automation secures a steady revenue stream and refines the customer experience, freeing businesses to zero in on enhancing service quality and bolstering customer loyalty.

Service providers

Service-oriented businesses, be they spas or consultancy agencies, find a valuable solution in online terminals. This technology empowers customers to book and pay for services via the business’s digital interface, simplifying the reservation and payment process and ensuring a smoother operation.

Brick-and-mortar stores

Traditional brick-and-mortar establishments expanding into online territories benefit immensely from online terminals. This integration offers a unified shopping experience, allowing customers to easily shop in-store, over the phone, by mail, and online, all while maintaining transaction security and consistency across channels.

Setting Up an Online Terminal

Integrating an online terminal marks a transformative step toward enhancing operational efficiency and security. The process unfolds through three strategic phases:

Choosing the ideal service provider

The foundation of a successful online terminal is the right service provider. This critical decision hinges on identifying providers that deliver robust security measures, ensuring seamless compatibility with the business’s existing sales infrastructure, and offering unparalleled customer support. Businesses should meticulously evaluate the pricing models of potential providers to find one that aligns with their transaction volumes and organizational scale. 

Integrating with the business’s digital ecosystem

The integration phase involves embedding the online terminal within the business’s website or eCommerce platform. Providers typically offer solutions designed for easy integration, requiring minimal technical expertise.

If you need a customized integration, you may have to collaborate with the provider’s technical support team or engage a professional developer. This step is crucial for ensuring that the terminal functions harmoniously within the business’s digital framework, facilitating a smooth transactional experience for customers.

Training the terminal’s users

Invest in solid training for your staff. Be sure to cover key operational aspects such as processing transactions, handling refunds, and accessing transaction reports. Providers usually offer training resources, including manuals, instructional videos, and live webinars. Committing to regular training sessions ensures that the staff remains proficient and up-to-date with the terminal’s latest features and compliance requirements.

Best Practices for Using Online Terminals

Optimizing the use of online terminals involves a blend of tech know-how, security compliance,  and customer-focused practices.  

Upholding security and regulatory standards

Security isn’t just a priority; it’s a necessity. Adherence to security protocols, such as PCI DSS compliance is a must. 

See to it that you have all your security bases covered. This includes encrypting transaction data, keeping security measures up to date, and scheduling regular audits. Equally important is training staff in security best practices, empowering them to be the first line of defense against potential data breaches.  

Ensuring timely updates of software and hardware

Tech moves fast, so be sure to keep up with all the necessary hardware and software updates. This fortifies security and ensures the business stays updated with the latest payment technologies and functionalities. Keeping systems updated minimizes vulnerabilities and maximizes efficiency, providing a seamless transactional experience that can adapt to market changes and customer expectations.

Streamlining the customer payment experience

A crucial aspect of effectively leveraging online terminals is to demystify the technology for customers. Providing clear, concise instructions and support for navigating the payment portal can drastically improve the customer experience. A user-friendly interface not only makes transactions smoother but also plays a significant role in reducing the likelihood of cart abandonment. This focus on clarity and ease of use reflects a business’s commitment to customer satisfaction, fostering loyalty, and encouraging repeat business.

Navigating the Challenges of Online Terminals

As with all technology, virtual terminals have some common challenges. Thankfully, with correct use, there are also easy solutions.

Technical issues

Technical hiccups are inevitable, but their impact can be minimized. Have a swift action plan in place, including immediate access to provider support and staff trained to troubleshoot common issues. This ensures transactions flow smoothly with minimal disruption.

Disputes and chargebacks

Clear communication is key to reducing payment disputes. Ensure product descriptions, service terms, and return policies are transparent. Use fraud detection tools and engage proactively with customers to address concerns early, preventing disputes from escalating into chargebacks.

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Final Words

Online terminals are critical tools in the digital toolkit of contemporary merchants, and they’ll continue to be indispensable as consumers become more digitally-focused. As such, having the right online terminal ensures that businesses not only stay competitive but also remain attuned to the evolving demands of their customers.

FAQs about Online Terminal

Q: What is an online terminal?

An online terminal, often referred to as a virtual terminal, is a web-based application that facilitates online payments without the need for a physical credit card machine or point of sale (POS) system.

Q: Why do businesses need an online terminal?

Online terminals offer seamless online payment processing, streamline business processes, bolster security, and provide valuable insights into customer behavior and sales trends. Adopting this technology helps businesses stay competitive and serve the needs of modern customers. 

Q: How can merchants select the best online terminal for their business?

You can select the best online terminal by considering factors like the provider’s security measures, compatibility with the business’s existing sales infrastructure, customer support quality, and pricing models that align with your transaction volumes .

Q: How do online terminals work?

Online terminals work as web-based applications that process payments online. They connect to multiple payment gateways, authorizing and processing payments from various sources like credit cards, debit cards, e-wallets, and sometimes bank transfers. The terminal’s security protocols, such as SSL encryption, tokenization, and PCI DSS compliance, protect sensitive payment information during transactions.