As a small business owner, you want to provide customers with as many buying options as possible. If you are venturing into e-commerce or conduct business over the phone, you want to make sure you set up a virtual terminal. A virtual terminal is used for payment processing and is required if you plan to accept credit or debit card payments. When comparing pricing models for different credit card processors, you need to be mindful of credit card transaction fees. These fees are required by payment processors to use their services. Being mindful of transaction fees could result in thousands more in your bank account at the end of the year. Here’s what you need to know about implementing the best virtual terminal credit processing system while saving on credit card transaction fees.
Virtual terminals are web applications that give you the ability to process payments without a card reader (aka a card-not-present transaction). The cardholders simply type in their card information and the payment is processed. On a screen, virtual terminal credit card processing looks like this:
Source: Bill.com
A variety of businesses can benefit from virtual terminal credit card processing, especially those that do business over the phone and internet. Industries where virtual terminal credit card processing is most used include:
No matter what type of business you have, if you plan on accepting credit card payments without having the card present physically, then you'll need to have a virtual terminal.
Want to explore other payment options? Read our guide to accepting credit card payments without a machine, including virtual terminals, payment links, and tap-to-pay.
Although virtual terminal credit card processing may not cost you much upfront (if anything), you’ll pay a per-transaction fee. Your total fee (or effective rate) comes from the following fees:
The average credit card processing fees are around 3.5%. However, the fees for virtual terminal credit card processing may not even end there, as there may be hidden additional fees. You may pay a monthly fee. Many MSPs have complex multi-tiered pricing that is heavily influenced by your transaction volume, so you may also have to pay surcharges if you do not have enough transactions each month. On top of all that, you may have to pay fees even if the sale is voided or refunded. Ask your credit card processing company to waive voided transaction fees and chargebacks. Otherwise, you're paying fees without actually receiving any revenue.
Virtual-terminal and in-person payments may have different processing rates. The amount you pay depends on your provider, pricing plan, card type, and how the payment is entered.
When comparing providers, request a quote that separates transaction charges from monthly service fees, equipment costs, and any additional charges. Check the rates for manually entered payments specifically rather than assuming an advertised in-person rate applies.
Use your actual transaction volume and average payment amount to estimate the total monthly cost.
Instead of looking at the individual transaction amount, it helps to look at the big picture and see the total dollar amount you stand to lose from credit card processing fees. First, as a TSYS U.S. Consumer Payment Study found, credit cards are the most popular form of payment at businesses that typically use virtual terminal credit card processing, like e-commerce stores and travel sites:
If you run an online clothing store or a boutique hotel, you could use virtual terminal credit card processing for nearly half of your transactions. As data from the U.S. Federal Reserve shows, non-cash transactions have a value of $112 per transaction, versus just $22 for cash transactions.
Given the numbers, 60-70% of your revenue could come from virtual terminal credit card processing, especially if you don’t do many in-person transactions. Now, let’s figure out how much you could be paying in fees. As an example, let’s say you run a small motel and your revenue is $2 million per year, among which:
In this hypothetical example, processing $1.3 million across 6,500 transactions at 3.15% + $0.30 costs $42,900 annually.
If the business earns $340,000 in annual profit, eliminating that entire expense would increase profit by approximately 12.6%. Actual savings depend on the replacement program’s processing charges, monthly fees, and other costs. Use your own statements and a complete provider quote to estimate the potential benefit.
Comparing ways to recover processing costs? Read our guide to credit card surcharging vs cash discount to understand the differences.
If you have a virtual terminal and POS credit card processing system, you can greatly reduce fees with a surcharge program. Here’s how it works:
A surcharge program can help recover credit card processing costs, but it does not eliminate every business expense. Nadapayments advertises a 3% credit card surcharge, subject to applicable limits. Debit processing costs the business 1.5% + $0.25 per transaction, with no surcharge to the customer.
Confirm your program’s requirements and pricing with Nadapayments before enabling surcharging. Include monthly service or equipment fees when estimating your savings.
If you are looking for an all-encompassing payment solution, be sure to look no further than Nadapayments. With Nadapayments, you receive everything you need to start processing credit card payments. Not only do you receive a Wi-Fi-enabled EMV Quick Chip machine, but you also receive a virtual terminal to process payments online or over the phone. There is also a mobile app, allowing you to process payments on the go.The system can accept major credit card brands and other payment methods including:
The Nadapayments Terminal costs $35 per month and includes the virtual terminal, payment links, invoicing, and recurring payments. Businesses that do not need hardware can choose the standalone virtual terminal for $29 per month.
Debit processing costs the business 1.5% + $0.25 per transaction. Review Nadapayments pricing and confirm the terms for your account before signing up.
A virtual terminal can help your business accept payments online or over the phone. Compare providers using the total cost of processing, including transaction charges, monthly subscriptions, and any equipment or additional service fees.
If you are considering Nadapayments, ask for a quote based on your payment volume and business needs. Get started with Nadapayments to discuss your options.
