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Virtual Terminals: How to Take Payments Over the Phone in 2020

Accepting credit and debit card payments over the phone is a quick, convenient, COVID-19-proof way of keeping your business going in 2020

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We are a team of writers, experimenters and researchers providing you with the best advice with zero bias or partiality.

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With COVID-19 forcing the public into lockdown and closing the vast majority of physical stores, ecommerce is soaring. Online sales in the UK from the first week of April 2020 were up 22% from the previous year, as shoppers take to the web for some much-needed retail therapy.

And guess what? An ecommerce boom is almost certainly good news for fledgling businesses – that is, if you’re able to accept card payments. If you don’t currently take card, well… you need to be.

And why not, when it’s as easy as picking up the phone? 

A virtual terminal is a tool that allows you to accept card payments over the phone – helping mitigate the effects of shop closures, and maintain cash flow.

But what is a virtual terminal, exactly? How do they work, how much will one set you back, and how do you choose the right supplier for your business?

Read on to find out more, and compare the best virtual terminals for UK startups. 

Would you like to get moving with setting up a merchant account for taking payments over the phone and online? Share with us a few more specific details about your business, and the kind of payments you want to start accepting. We’ll then match you with leading merchant services providers, who’ll provide you with quotes tailored to your requirements and industry.


What is a virtual terminal?

A virtual terminal is a web-based portal that allows businesses to accept card payments remotely. It’s a quick, handy alternative to a physical card machine – and you won’t need a website, either.

A virtual terminal is essentially a secure webpage into which you enter your customer’s card details. There’s nothing to download or install, and nothing complicated about the process. 

All you’ll need is a phone, an internet connection, and a merchant account to accept the funds.


How do you get a virtual terminal?

Of course, that means that if you don't already have a merchant account, you’ll require one.

A merchant account is mandatory for any and all businesses accepting card payments. It’s not the same as a business bank account; it’s more like a kind of virtual holding pen, where funds go to be authorised and cleared before they hit your coffers.

You can get a merchant account through a traditional merchant services provider, such as First Data, takepayments (formerly Payzone), or Worldpay, or directly through an acquiring bank (we recommend Barclaycard). 

For lower volume businesses, payment facilitators such as Square and SumUp offer a cheaper, more simple alternative.

Virtual terminals are either included as standard within the cost of your merchant account, or offered as an optional add-on service. Sometimes, they’re bundled together with other ecommerce services, such as a payment gateway or ‘pay by link’ tool.

Do you currently have a merchant account?


How to take a card payment over the phone

So, back to the process. Taking a card payment over the phone is actually pretty simple. Here’s a step-by-step guide to a typical transaction:

  1. Call your customer (or pick up the phone when they call you). Navigate the small talk, and agree the price of the sale. 
  2. Open the virtual terminal interface from your web browser, and log in.
  3. Enter the price of the sale, and hit ‘manual card entry’ (or your terminal’s variation of this).
  4. Have the customer read out their card details, and enter them straight into the portal (this is important – see our FAQ about PCI compliance below for more information).
  5. Key in the address associated with the card (this is also crucial, as virtual terminals use AVS (Address Verification Service) to verify transactions).
  6. Hit ‘confirm’, and hey, presto! You’ve just made some money, all while complying with social distancing guidelines.


How much does it cost to take payments over the phone?

Virtual terminal fee structures and exact pricing varies across different suppliers. Some merchant services providers offer their virtual terminal service at no monthly cost, with just a flat percentage-based fee applied to each transaction you accept through it. 

This pricing style is more common with payment facilitators. Square, for instance, charges just 2.5% of each transaction, while SumUp’s fee is 2.95% + 25p per sale. 

Other suppliers – typically traditional merchant account providers – charge a monthly fee, with transaction fees on top of that. Worldpay’s service, for instance, is £9.95 (excl. VAT) per month, while Sage Pay's virtual terminal incurs a monthly fee of £15 (excl. VAT).

Sometimes, that monthly charge includes a set amount of ‘free’ transactions – with Handepay for instance, you’ll pay £9.99 per month, which gets you 200 transactions during that period. Any sales you make over that limit are charged at a flat rate of 10p per occurrence.

Other providers, such as PayPal, operate a noticeably different ‘sliding’ pricing scale. On top of a fixed monthly fee of £20, PayPal’s per transaction rates are based on your business’ overall sales volume. 

If that volume is less than £1,500 in card payments per month, you’ll pay 3.4% + 20p per transaction. Up to £6,000, that fee drops to 2.9% + 20p, while businesses taking between £6,000 and £15,000 in card volume will pay 2.4% + 20p

Businesses raking in upwards of £15,000 in card payments are looking at the sweetest deal, with PayPal’s fee for this bracket sitting at just 1.9% + 20p.

That’s the pricing info out of the way. And as you’ve seen, virtual terminals are like Orwell’s animals – not all of them are created equal. So which one is the best fit for the unique requirements of your business?


What are the best virtual terminals in the UK?

We found that the best virtual terminals in the UK come from Square, Handepay, and SumUp.

Virtual terminal providerBest forMonthly feeTransaction feeLearn more
SquareLow volume, low value transactionsNone2.5%Read review
HandepaySmall UK businesses£9.99 (excl. VAT)10p (after 200 transactions)Read review
SumUpMicro-merchantsNone2.95% + 20pRead review

Square

Best for low volume, low value transactions

Startups recommends Square for merchants accepting low volume, low value transactions because of its flat rate pricing structure and lack of monthly fees.
Square logo
For a slick, savvy virtual terminal solution that’s as easy on the eye as it is on the wallet, look no further than Square. It’s simple to set up, and even more simple to use – making it ideal for businesses new to accepting payments over the phone. 

With a transaction fee of just 2.5% and no monthly, setup, or PCI compliance fees, Square is also one of the cheapest options around. But that doesn’t mean you’ll have to sacrifice features – Square’s reporting capabilities are excellent, and the ability to save card details helps streamline the process of charging returning customers.

Visit Square for more information about how they can help you facilitate taking payments over the phone.

Pros:

24/7 customer support

No long contracts

No credit check

Cons:

Not suitable for businesses with higher sales volumes


Handepay

Best for small UK businesses

Startups recommends Handepay for small UK businesses because of its dedicated, UK-based customer support, low prices, and e-invoicing capability.
Handepay logo
Independent Merseyside-based merchant services provider Handepay also offers a solution that’s just as much substance as it is style. And, at just £9.99 per month – with your first 200 transactions thrown in – its virtual terminal is great value for money.

Handepay’s virtual terminal also comes with an online dashboard, allowing you to track your sales and manage your business in real time. Oh, and you’ll get Handepay’s ‘Pay by Link’ feature – plus the ability to send e-invoices to your customers – included as standard. Handy, indeed!

Pros:

Excellent online customer approval ratings

No hidden fees

Dedicated, UK-based customer support is available…

Cons:

…though only between 9am and 5.30pm on weekdays


SumUp

Best for micro-merchants

Startups recommends SumUp for micro-merchants because of its low, fixed fees, simplicity, PCI compliance, and the wide range of card types it can accept.
SumUp logo
Whether you’re a market stall operator, a taxi driver taking payments from the back of your cab, or simply a merchant in need of a straightforward way of getting paid on the go, SumUp is a tried and tested solution. And as it happens, its virtual terminal is excellent, too.

At 2.95% + 25p, it’s still a little pricier than Square. But your PCI compliance is handled for you, and there are no setup or recurring fees, which still makes SumUp decent value for money in the long run.

Pros:

Smooth, intuitive interface

No lengthy commitment required

Accepts a wide range of card types, including Maestro, Discover, Diners Club, and JCB

Cons:

Not a cost-effective solution for larger businesses

None of the above providers take your fancy? Don’t fret – there are plenty of other virtual terminal providers in the UK that may be suitable for your business. We also recommend:

  • Worldpay
  • Sage Pay
  • Stripe
  • Dharma Merchant Services

Read on for our final tips on how to make the right choice when it comes to taking payments over the phone.


Choosing the right virtual terminal for your business

Taking payments over the phone doesn’t have to be difficult. 

Sure, applying for a dedicated merchant account can take time, and isn’t necessarily a short-term fix. But when the current crisis is over, your business will be better-equipped to face the challenges posed by an increasingly cash-averse customer base.

So, why not start now and begin comparing merchant services providers with us? It takes less than a minute, and is by far your business’ quickest route to finding the supplier best-suited to your needs. Here’s how the process works:

1. Provide us with a few brief details about your business, so we can assess your requirements. We’ll ask:

  • If you currently have a merchant account – and if so, with who
  • What industry you’re in
  • How you’d like to accept payments (online, or just over the phone?)
  • How much you expect to process in card payments per month

2. We’ll also need your postcode, so we can partner you only with suppliers catering to your area

3. Then, we’ll do just that – matching you with the merchant services providers that fit your needs, who’ll provide you with quotes tailored to your business. Simple!

Hit one of the thumbs below to get started.

Are you currently taking payments online?


Accepting card payments over the phone: FAQs

What is PCI DSS, and how do I remain compliant?

PCI DSS stands for Payment Card Industry Data Security Standards. It’s a set of strict guidelines safeguarding the transmission of sensitive data in card transactions. All businesses processing card payments must comply.

The easiest way to achieve PCI compliance is to select a merchant services provider that is already compliant. The networks and processes these companies utilise are already encrypted to the sufficient level, so there’s nothing more required from your side. In some cases, PCI compliance might cost a fee (a few pounds a month, at most), but trust us – it’s worth it.

Is it safe to take payments over the phone?

The answer, as with most things, is yes – providing you do it properly

As mentioned, maintaining PCI compliance involves taking protective measures to keep cardholder data (i.e. your customer’s card credit card number) safe. If you’re not doing it right, you could face big fines.

Virtual terminals are PCI compliant, but there are still some basic precautions you should take when using them. Don’t, for instance, jot down any card details on a piece of paper while receiving them. If you absolutely must write this sensitive information down, ensure the paper it’s on is destroyed as soon as the transaction is complete.

Entering card details directly into the terminal is always best practice… and will help avoid any awkward conversations down the line.

Does iZettle offer a virtual terminal service?

iZettle does not offer a virtual terminal, no. However, you can still use iZettle to take payments over the phone. 

Simply take the order, then use iZettle’s mobile app to generate and send a payment link to the customer via SMS, social media, or email. They simply have to click the link, which will take them to a secure page to enter their card details and pay.


Rob Binns
Rob Binns

Senior Writer

Rob has been writing for Startups since the COVID-19 pandemic of 2020. Hailing from Wellington, New Zealand, Rob brings to the table industry-specific knowledge of payments, finance, cryptocurrency, and business loans.

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