The dangers of using virtual terminals for accepting business payments.


Asha Cole
October 27, 2023

What are virtual terminals and how do they work?

Virtual terminals are online platforms that allow businesses to process customer payments. They work by a business owner or staff member manually entering customer credit and debit card information to process a payment.

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The benefits of using a virtual terminal for businesses

Virtual terminals are convenient because they can be accessed from any internet-connected device, and they’re typically less expensive than traditional EFTPOS terminals and card machines. In addition, virtual terminals offer several features that can benefit businesses, such as the ability to process multiple types of payments, track customer purchase history, and generate detailed reports.

The security risks associated with virtual terminals

Unfortunately, virtual terminals are not a secure method of accepting payments. Since staff members manually enter the customer's card information, there is an increased risk of errors and fraud. Typically, customers can be apprehensive to give their credit or debit card information over the phone - especially if they don't know the business well.

In addition, customers’ data is at risk of being stolen if the terminal has not been encrypted correctly. Finally, businesses are open to potential lawsuits if their customer’s card details are stolen due to the lack of secure payment processing.

How to protect your business against these risks

To ensure that transactions remain safe and secure, businesses need to choose a payment processor that uses PCI-compliant technology and provides encryption services, such as tokenization. By choosing a trusted provider with an established track record, businesses can reduce the risk of fraud and data theft.

In addition, businesses should ensure that their staff is properly trained to process payments securely and accurately. Staff members should be aware of the risks associated with using virtual terminals, as well as the importance of double-checking customer details before processing payments.

Even if these steps are followed, businesses may still run into the issue where customers are not comfortable giving their sensitive card information over the phone, or by sending it in on a physical document.

Due to recent large-scale data breaches of Optus and Medibank customers are beginning to be even more concerned as to where their credit and debit card information is being stored.

Alternatives to virtual terminals that are just as secure and offer more benefits

Whilst virtual terminals can be a decent option for businesses that want to accept credit card payments, other options offer the full functionality of a virtual terminal with more benefits for the business and its customers.

A more modern solution for businesses would be to use QR codes and payment links to accept payments from their customers. When using a QR code payments provider like Pebl, business owners and their staff can request payments from their customers by sending them a URL via SMS, Email, Facebook Messenger, WhatsApp or any other preferred messenger service. The customer can click the link to be taken to a secure checkout, where they can pay by their preferred payment method including Apple Pay and Google Pay - from the privacy of their phone.

A QR code payments provider like Pebl is a great alternative for businesses that take payments in-person or over the phone and would like to give their customers more confidence and options when making payments.

If you have e-commerce functionality on your website, a great alternative would be using a payment gateway. Payment gateways provide businesses with a secure way to accept payments online. They also offer additional features like fraud prevention and customer management tools.