I have about a decade of experience in the credit card processing field and although the merchant account niche can be volatile and unpredictable, I can draw several universal truths, including the following: Each time the processors are given additional responsibilities and requirements -- be it from the card holding associations or from government -- many will defray the costs of such mandates to the merchant.  Agents, such as myself, are then saddled with the unenviable task of bearing the news of increased rates to the merchants, although we don't make any additional commission from the new fees.  Moreover, while the processors are facing additional costs due to regulatory intervention, the suspicious question arises: Are they using it as an excuse to amass profit?   

Consider the omnipresent PCI compliance fee.  There's no doubt that definite costs are beared to secure backend networks, perform scanning, complete administrative work, and educate merchants (some companies have their own PCI compliance departments).  But the range of PCI compliance fees vary widely.  Some charge annually; some monthly; and some assess both monthly and annual PCI fees, and the total PCI-related cost can range from about $50 per year to well over $200.

Similarly, when legislation was passed in 2008 mandating processors to report merchants' gross income, starting in 2012, I cringed: I knew that such legislation would not only impact merchants but also processors.  It was almost a foregone conclusion that additional administrative and recordkeeping responsibilities beared by the processors would translate into what we now call an an IRS Reporting Fee.       

Yesterday, I received a phone call from a prospective client who intended to either buy or lease a physical credit card terminal although she would not have the customers' cards in hand. Indeed, her business required MOTO (mail order telephone order) credit card processing where she was simply going to key in the credit card information using a physical device. Although she was an admitted computer phobic, she became very interested in an online payment processing mechanism once I told her that it did not entail any initial setup fee.

"What is the system called?" she inquired hurriedly. I replied, "virtual terminal credit card processing." "What exactly is a virtual terminal?" she then wondered. Although I wanted to show her a demo as so many folks are visual learners, her time constraints prevented my show and tell. I simply declared that it was an Internet-based interface or screen where the merchant can manually key in the customers' credit card information following self-explanatory fields, such as the credit card number, expiration date, amount of sale, etc.

I proceeded to give the following overview of virtual terminal credit card processing: First, the merchant logs on using a unique user name and password. Once in the system, the fields are already visible, or with some systems, you'll have to click on "virtual terminal" to open up the screen's fields. Once you have access to the virtual terminal, you can systematically look at the information that is required and then carefully proceed to input the values of all necessary entries.

You probably will initially see a prompt for payment method. Here, you will either indicate whether you intend to charge a credit card or refund a credit card. You may then select a transaction type. Specifically, you will indicate whether you wish to authorize and capture the transaction -- the standard course of action when conducting a sale. However, you can alternatively only authorize a card (i.e., to see if the customer has ample funds in his/her account to pay for your product or service) or capture a card (i.e., settle and batch the transaction from a previous authorization). You can also manually capture transactions that were declined, if you wish.

Most business folks typically just need authorization and capture. In others words, both authorization and capture practically occur simultaneously. In other words, the customer's card is submitted for authorization, and if approved, the funds are automatically batched out and settled.

Now virtual terminal credit card processing mandates that you type in the payment/authorization information applicable to the transaction. As expected, the customer's credit card number, expiration date, and transaction amount are all required fields. The card code (the three security numbers in back of Visa, MC, and Discover or the four-digit code on the front of an American Express card) should be inputted as well -- although some systems do not require you to do so.

Obviously, the more information you input about the transaction, the better from a security and reconciliation standpoint. The customer's first and last name, address (including street number and zip code), and perhaps the name of the company, if applicable, are useful sources of info. Some virtual terminal credit card processing systems allow you to customize settings, enabling you to add categories, such as the invoice number. You can customize the categories that will be highlighted by going into the "virtual terminal settings." Any field can either be viewed, edited, or marked as required. You must input information for the required fields, or the transaction will not be processed.

Information that you input into your selected fields can be viewed in your virtual terminal transaction history. This history contains a record of all virtual terminal credit card processing transactions that have occurred. It also keeps track of online transactions that have transpired if you also have an online gateway.

Of noteworthy importance: it's advisable to at least input the customer's zip code, if not the street address, to ensure that it matches what's listed on the customer's credit card. An AVS match suggests that there is less risk of fraud. Moreover, merchant account processors will downgrade a transaction to non-qualified status (where the merchant pays a higher rate) if he/she does not attempt address verification or if there is an AVS mismatch.

As you can see, virtual terminal credit card processing is easy and straightforward. The Authorize.net virtual terminal is widely used, known for its simplicity, affordability, and added bells and whistles. An Authorize.net virtual terminal credit card processing unit enables you, for example, to accept electronic checks and process automated, recurring transactions. There are many virtual terminal systems that allow you to process credit cards, too -- and if you don't need any value added services -- the cost should be even lower. I hope the woman who learned about virtual terminal credit card processing will see its inherent benefits, and that you, also, will discern its myriad advantages.