By Hollie Lamb June 3, 2025
In the world of e-commerce, accepting payments securely and efficiently is one of the most important factors for success. Two critical tools that make this possible are virtual terminals and payment gateways. While often used interchangeably, they serve different purposes and are essential for different business needs. As more businesses move online in 2025, understanding the difference between these tools and how they interact with your e-commerce strategy becomes increasingly important.
What Is a Virtual Terminal?
A virtual terminal is a web-based application that allows businesses to manually enter payment information and process card-not-present transactions. Think of it as a digital version of a traditional credit card machine, used without the physical swiping or tapping of a card.
These terminals are especially useful for remote transactions. For example, a business might take an order over the phone and then input the customer’s card details into the virtual terminal to complete the payment.
Virtual terminals are commonly used by service providers, remote teams, or businesses that accept orders outside of a physical storefront. They offer flexibility and convenience, especially for merchants that need to process occasional or manual payments.
What Is a Payment Gateway?
A payment gateway acts as the technology that captures and transfers payment data from the customer to the acquiring bank. It is what powers the checkout process on your website.
When a customer places an order online and enters their payment information, the payment gateway securely encrypts the data, sends it for authorization, and returns a response indicating approval or denial. It serves as the go-between that makes online payment possible.
Payment gateways can be embedded directly into a site’s checkout page or hosted externally by the provider. They support multiple payment methods, currencies, and integrate with fraud detection systems to protect both customers and businesses.
Key Differences Between Virtual Terminals and Payment Gateways
Although they both support electronic payments, virtual terminals and payment gateways differ in use cases, setup, and user experience.
Virtual terminals are used by merchants to input customer information manually, while payment gateways are customer-facing and automate the process. Virtual terminals are ideal for transactions where the cardholder is not present, while payment gateways are better suited for self-service online checkouts.
Another major difference is their role in the transaction flow. The virtual terminal is an interface, often part of a merchant account, used behind the scenes. The payment gateway is part of the public-facing checkout system that authorizes and routes payments.
When to Use a Virtual Terminal
Not every business needs a virtual terminal, but they become essential in specific situations. Service-oriented businesses that receive orders by phone or email can use a virtual terminal to process payments securely without needing a card reader.
They are also useful for recurring payments, invoice settlements, and delayed orders. Businesses with customer service or billing departments often rely on virtual terminals to manage card payments.
If you process a high volume of remote, card-not-present payments, adding a virtual terminal to your toolkit can streamline operations and provide more flexibility.
When to Use a Payment Gateway
For businesses selling products or services through an online storefront, a payment gateway is non-negotiable. It handles all customer-initiated payments on the website, mobile app, or other digital channels.
Whether you run a small online boutique or a large enterprise e-commerce site, a payment gateway ensures that transactions are processed smoothly, securely, and in real time. It also provides important features such as transaction reports, fraud screening, and refund management.
Using a reliable gateway minimizes friction during checkout and helps reduce cart abandonment. As the final step in the buying journey, its performance can make or break a sale.
Integrating Virtual Terminals and Payment Gateways Together
Some businesses benefit from having both tools available. A company might use a payment gateway for website purchases and a virtual terminal for customer service reps processing phone orders.
Modern merchant service providers often bundle these tools into a single platform, allowing merchants to access both functionalities through one dashboard. This unified approach simplifies accounting, reporting, and customer management.
Choosing a provider that offers both options provides added flexibility. Whether your customer clicks “buy” online or calls your business directly, you can process their payment without missing a beat.
Security Considerations
Security is a top priority when handling customer payment data. Both virtual terminals and payment gateways should comply with PCI DSS standards to protect sensitive information.
Look for features such as encryption, tokenization, and real-time fraud detection. Reputable providers also offer additional layers of protection like address verification systems and CVV matching.
For virtual terminals, ensure access is limited to authorized users, and that data is not stored on local devices. For gateways, ensure the checkout is SSL-secured and integrates seamlessly without exposing data to third parties.
By taking these precautions, businesses can build customer trust and avoid costly breaches or penalties.
Cost Considerations
Pricing models vary depending on the provider and the services offered. Virtual terminals often come with monthly fees and per-transaction costs, especially if they are part of a full merchant account.
Payment gateways may charge setup fees, monthly maintenance fees, and transaction fees. Some providers offer tiered pricing based on volume, while others follow a flat-rate or interchange-plus model.
Evaluate your transaction volume, average ticket size, and frequency of manual versus automated payments to determine which service offers the best value. Also consider if the provider includes additional services like invoicing, subscriptions, or international support.
Understanding the fee structure and total cost of ownership helps avoid surprises and plan better.
Mobile Accessibility and Remote Use
Many businesses operate on the go. Virtual terminals accessed via cloud dashboards or mobile apps allow teams to accept payments from anywhere.
Payment gateways integrated into mobile-friendly websites or apps ensure smooth checkout experiences regardless of device. As mobile commerce grows, these features become increasingly important.
Ask your provider whether their tools support mobile optimization and remote access. This ensures that your payment systems are as flexible as your business needs to be.
Compatibility with E-Commerce Platforms
Your chosen virtual terminal or payment gateway should work well with your e-commerce setup. Popular platforms like Shopify, WooCommerce, BigCommerce, and Squarespace often support multiple payment options.
Check whether your provider offers plugins or extensions to simplify the integration process. Also verify whether advanced features such as one-click checkout, saved cards, or automatic tax calculation are supported.
The easier it is to plug in your payment tools, the faster you can launch and scale your business.
Reporting and Analytics
Access to real-time transaction data, sales summaries, and refund reports helps you make informed decisions. Both virtual terminals and payment gateways should provide detailed dashboards and downloadable reports.
Look for customizable views, alerts for failed transactions, and the ability to filter by date, payment type, or customer. Insights into average order value, peak sales hours, and chargeback trends can help refine your sales strategy.
Analytics not only improve operations but also assist with compliance and forecasting.
Customization and Branding
Customer trust is often built through consistency. Choose a payment gateway that allows customization of checkout pages to match your brand’s look and feel.
Options to add logos, match color schemes, and use your domain name during checkout enhance credibility. Seamless experiences lead to higher customer satisfaction and conversion rates.
Virtual terminals may not be customer-facing, but an intuitive and clean interface improves the user experience for your internal team. Choose platforms that offer user-friendly dashboards and role-based permissions.
Customer Support and Service
Responsive customer support is essential, especially when dealing with payment interruptions. Ensure your provider offers multiple support channels, including chat, phone, and email.
Check service availability hours and whether they offer priority support for technical issues. Resources like tutorials, knowledge bases, and onboarding assistance can also shorten the learning curve.
A provider that actively supports you becomes a partner in your success, not just a vendor.
Conclusion: Choosing the Right Solution for Your Needs
Understanding the differences and synergies between virtual terminals and payment gateways can empower your business to operate more efficiently. Both tools play vital roles in the e-commerce payment ecosystem.
Choose a virtual terminal if your operations require manual payment input, such as over-the-phone orders or delayed billing. Opt for a payment gateway when selling directly through a website or app.
Many businesses benefit from having access to both, especially when working with a provider that integrates them under one platform. Evaluate your business model, customer habits, and technical needs to find the right combination.
By focusing on security, flexibility, ease of integration, and quality support, you can select the tools that keep your transactions flowing and your customers satisfied.