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Payment Gateways vs. Virtual Terminals

Updated: Dec 29, 2023

If you’ve heard the terms “payment gateways” and “virtual terminals” while searching for merchant services and are confused, don’t be! Although these services are similar, they are not the same. And since being a business owner is already daunting enough, we’ll explain the differences so that you can confidently recognize exactly what your business needs.

Gateways vs. Terminals

Depending on what type of company you have will determine which service you’ll want (or need), but it starts with understanding your options:

· Payment Gateways

Essentially, payment gateways are software typically used for ecommerce transactions that approves purchases, allowing business owners to accept debit and credit cards safely. When a purchase is made by a customer, gateways connect the client’s card to the issuing bank, authorizing the authenticity and checking for adequate funds, then later depositing approved payments (in batches) directly to the merchant’s account.

Gateways can be easily integrated into websites or other ecommerce platforms, which is a huge benefit, but really- it’s the speed, reliability, flexibility, and security that benefit businesses who choose to utilize it.

· Virtual Terminals

Virtual terminals, on the other hand, is an internet-based service that makes it possible for a merchant to accept payments without a card present, like a phone or email order, by manually entering in the customer’s card information. In other words, this allows the business to enter payment details on behalf of the customer, with or without them there.

In this case, only the merchant uses the virtual terminal, unlike a payment gateway, and the transaction can be completed anywhere with internet access (making it super convenient). But it’s important to note, with all card not present transactions, there is a higher level of risk associated with them… meaning there will be higher processing fees for using this service.

Let me simplify it like this- a payment gateway can be used without a virtual terminal, but a virtual terminal cannot be used without a payment gateway. If you’re already processing cards and think a virtual terminal could benefit you, ask your service provider about their options. For those not accepting cards yet, or if you’re interested in switching (and saving money), reach out to Align ecommerce where we have the tools and technology to help! Here are some related articles that might help you in your journey.

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