<p>The world of payment processing is packed with jargon and acronyms. One particular thing that causes confusion is the difference between a payment gateway and a virtual terminal.</p>
<p>In this article, we describe both virtual terminals and payment gateways and explain the circumstances where you might use one or both.</p>
<h2>Payment Gateway vs. Virtual Terminal</h2>
<p>Before explaining the differences between a payment gateway and a virtual terminal for credit card processing, it’s helpful to illustrate the similarities.</p>
<p>Both systems allow merchants to accept card payments from customers and seek authorizations from issuing banks. Payment gateway providers often offer both payment gateways <em>and </em>virtual terminals. In many cases, businesses decide that they can benefit from access to both to provide customers with a choice of convenient payment methods.</p>
<p>Let’s look at each in turn.</p>
<h2>What is a Payment Gateway?</h2>
<p>A payment gateway is the online equivalent of a card processing terminal in a physical store. Anyone running an <a href="https://sonary.com/ecommerce/">eCommerce store</a> who wishes to accept online payments must integrate a payment gateway within their website infrastructure.</p>
<p>Payment gateways require online customers to key in their card details themselves. Those are then passed through to a payment processor for authorization and security checks. In turn, the same merchant service provider usually handles the back-office function of transferring the funds to the merchant’s account.</p>
<blockquote>
<p>Payment gateways require online customers to key in their card details themselves.</p>
</blockquote>
<p>End-to-end payment gateway service providers like <a href="https://sonary.com/b/chase/chase+merchant-services/">Chase Merchant Services</a> handle every part of the process. All have subtly different charging models, but generally speaking, they make their money with transaction fees and subscription charges.</p>
<h2>What is a Virtual Terminal?</h2>
<p>A virtual terminal is another way to accept payments. It gives merchants the ability to key in customer card details manually. This opens up the ability to take telephone payments, in-person payments in stores and at one-off events, and even payments from old-fashioned mail-in forms.</p>
<p><strong>While payments made via an eCommerce payment gateway involve the paying customer inputting their details, virtual terminals allow the business (the merchant) to do so.</strong></p>
<blockquote>
<p>Virtual terminals give businesses a way to manually key in company card details. </p>
</blockquote>
<p>Virtual terminals also utilize online services. Usually, merchants will log on to a secure website or use a mobile app to access the virtual terminal. The details provided, such as card number and expiry date, are generally the same as those a customer would provide if they were initiating an online transaction themselves.</p>
<p>Online shopping <em>seems</em> ubiquitous and continues to grow more popular each year. However, around 24% of the US population still <em>don’t </em>shop online. Use of a virtual terminal gives businesses the ability to take payments from those who would prefer to pass their payment details to a “real person.”</p>
<h2>Which Do You Need?</h2>
<p>To make things just a little more complicated, virtual terminal credit card processing <em>uses </em>a payment gateway!</p>
<p>The easiest way to understand this is that:</p>
<ul>
	<li>You <em>can</em> have a payment gateway without a virtual terminal.</li>
	<li>You <em>can’t</em> have a virtual terminal without a payment gateway.</li>
</ul>
<p>As referenced above, merchant service providers often offer an all-in solution. For example, <a href="https://sonary.com/b/square/square+merchant-services/">Square</a> offers a virtual terminal that uses its own payment gateway. Sometimes, a virtual terminal will be an add-on from an eCommerce provider, allowing businesses to take in-person and phone payments alongside website transactions made by customers.</p>
<p>Here are a couple of possible scenarios:</p>
<ul>
	<li>If you’re a purely online business, wishing to take a “hands-off” approach to accepting card payments, you may purely wish to invest in a payment gateway. This will be integrated as part of your website, and will process payments where customers input their card details.</li>
	<li>If you also want to ability to manually input card details – perhaps for payments made over the phone – a virtual terminal allows you to do this. It’s worth noting that plenty of providers throw in access to a virtual terminal as part of a packaged service.</li>
</ul>
<h2>Things to Consider</h2>
<p><a href="https://sonary.com/pos/">Payment processing providers</a> often offer a comprehensive package of services. Here are a few things that are handy to keep in mind when navigating complicated lists of features:</p>
<ul>
	<li>Shopping cart abandonment is a considerable problem for online businesses. A <a href="https://www.shopify.com/uk/blog/shopping-cart-abandonment" target="_blank" rel="noopener noreferrer">study shows</a> that 69.57% of online shopping carts are abandoned. Providing customers with friction-free ways to pay and a wide range of payment methods can help to reduce the ratio of abandoned carts.</li>
</ul>
<p>Virtual terminals often allow additional methods of payment alongside credit and debit card, such as ACH and check. Combined with the ability to process manual card payments when people struggle to complete an online purchase, a virtual terminal can give your business plenty of options to increase conversion rates and win more paying customers</p>
<ul>
	<li>There’s considerable nuance in how providers charge for payment gateway services. Some charge purely based on transactions, while others introduce an element of monthly fees. It’s well worth considering the unique trading patterns of your business to work out which will be most cost-effective.</li>
	<li>Payments made via a virtual terminal are almost always treated as “card not present” transactions. These often come with higher processing fees, reflecting the higher level of fraud risk and cost of related security checks.</li>
</ul>
<p>While offering customers multiple ways to pay is desirable, it still makes sense to steer them to methods that cost less to process and require no manual intervention.</p>
<p>If you are doing business online, you <em>need </em>a payment gateway. In many cases, adding a virtual terminal will be beneficial, offering you complementary ways of accepting customer payments.</p>
<p>If you run a mail-order or telephone-order business, a virtual terminal could form the heart of your infrastructure for taking payments. </p>
<p>Either way, when researching payment gateway providers for your business, it’s valuable to understand a virtual terminal&#8217;s role. It’s almost always something that can add value.</p>

What's the Difference? Payment Gateway vs. Virtual Terminal

The world of payment processing is packed with jargon and acronyms. One...

<p>Employee payroll can create a serious headache for small and growing businesses.</p>
<p>Payroll for small business is complicated. Your firm may not have the need or resources for a full-time payroll person, but you’re still exposed to all of the same intricacies and legal obligations as your larger counterparts. Payroll mistakes can have far-reaching implications, impacting everything from privacy and compliance to employee morale.</p>
<p>Third-party <a href="/payroll-services/">payroll providers</a> help to bridge the gap. They allow you to outsource the challenges of payroll, handing them over to a third-party service and software solution. This frees up your time to grow the business and focus on other tasks.</p>
<h2>If you’re a small business owner</h2>
<p>You probably have no desire to become a payroll expert. However, you are still obligated to complete processes properly and pay people accurately and on time.</p>
<blockquote>
<p>Payroll best practices matter. A surefire way to destroy employee morale is to pay people late or inaccurately.</p>
</blockquote>
<p>In this article, we look at how payroll services can save you time, money and resources. First, let’s look at the typical features of payroll software and services.</p>
<h2>Features of Payroll Software</h2>
<p>So, what do payroll companies do? They typically provide a cloud-based software product, alongside expert support from payroll experts who can assist with queries and compliance issues.</p>
<h3>Typical features include:</h3>
<ul>
	<li>The ability to feed in staff salaries and hours, run regular payroll and distribute money both to employees and tax authorities.</li>
	<li>Integration with other company <a href="https://sonary.com/accounting-software/">financial systems</a>, 401k providers and time tracking systems.</li>
	<li>Tracking for sickness and paid vacations.</li>
	<li>Management of staff expenses such as mileage.</li>
	<li>Filing of legal payroll documents such as annual and quarterly return forms.</li>
</ul>
<p>In some cases, payroll packages go way beyond payroll itself. They offer comprehensive HR management functionality that touches on everything from benefit admin to recruitment and learning management. Paycor is a good <a href="https://sonary.com/b/paycor/paycor+payroll-services/">example of a payroll service provider</a> that offers a broad solution for the whole HR function.</p>
<h2>Saving Time, Money and Resources: The Benefits of Using a Payroll Service Provider</h2>
<h3>Convenience</h3>
<p>Payroll packages keep all related information in one place, rather than strewn across paper files and manually maintained Excel documents.</p>
<p>Payroll is an intricate process that requires a considerable amount of personal data for each employee. The calculations can be complex, with a significant risk of error when the work is done manually. Payroll providers help enforce best payroll practices, whilst minimizing manual work.</p>
<h3>Compliance</h3>
<p>There are over <a href="https://www.businessinsider.com/sc/startup-payroll-fines-2015-4?r=US&amp;IR=T" target="_blank" rel="noopener noreferrer">15,000 different tax codes</a> in the US alone, alongside a constantly evolving landscape of new allowances and regulations. Different states have different deadlines and reporting requirements.</p>
<p>This is incredibly difficult for a single person to keep track of – especially a person without a background in payroll and tax admin. It’s hard enough for companies operating in just one country, let alone those with an international workforce. Some <a href="https://sonary.com/b/remote/remote+payroll-services/">payroll packages</a>, such as Remote, are geared up for companies with global operations.</p>
<p>In 2020, the IRS issued <a href="https://fitsmallbusiness.com/payroll-statistics/" target="_blank" rel="noopener noreferrer">around $6 Billion</a> in fines to companies who had made errors in employment taxes. Outsourcing payrolling to a specialist company can reduce the risk of this happening to you. </p>
<blockquote>
<p>Payroll related fines are common, and a genuine risk to your company. Even innocent mistakes can cost.</p>
</blockquote>
<h3>Cost Saving</h3>
<p>As a small business owner, your time has considerable value. Even just two days per month working on processing payroll is two days you’re unable to spend on profitable work or business development. The cost of a payroll service is (relatively) trivial, and likely to represent a significant saving over using your own time, or paying a dedicated freelance bookkeeper.</p>
<p>Then there’s the cost of mistakes. We’ve already talked about the potential of fines for non-compliance, but there’s also the risk of over-paying employees, or handing too much money over to the tax authorities. </p>
<h3>Security</h3>
<p>Payroll processing, by its nature, involves processing sensitive and confidential information.</p>
<p>Payroll providers tend to offer strong “enterprise grade” security for this data. Using a single system means that data related to employee’s income and tax affairs can be kept in one place, and not kept in insecure files elsewhere.</p>
<h3>Employee Experience</h3>
<p>Payroll errors matter to employees. An underpayment can result in mortgages, rent payments and bills going unpaid. This can then have knock-on effects on credit ratings, causing legitimate stress and hardship.</p>
<p>It’s little wonder that <a href="https://fitsmallbusiness.com/payroll-statistics/" target="_blank" rel="noopener noreferrer">49% of workers say</a> that they tend to start looking for a new job “after two paycheck errors.”</p>
<p>Manually processing payroll, especially without expert knowledge, puts staff loyalty and morale at risk. Slow manual systems for tracking things like hours worked, mileage claims and overtime also place extra pressure on staff.</p>
<p>Once again, a centralized payroll system can help with this, providing staff with a simple interface for managing their salaries and hours worked. </p>
<h3>Benefit Admin</h3>
<p>In the modern workplace, employees consider far more than just the headline salary. <a href="https://hermoney.com/earn/careers/is-my-job-offer-really-the-total-package-how-to-know/" target="_blank" rel="noopener noreferrer">60% of employees consider</a> the overall benefits package as “one of the most important contributors to job satisfaction.”</p>
<p>A comprehensive package of benefits requires considerable admin: 401K contributions, health plans, paid time off, life insurance and much more. Many of these things have complex tax implications, further adding to the administrative burden.</p>
<p>Benefits admin is a key component of many payroll packages, saving internal time and resources.</p>
<h3>Additional Functionality</h3>
<p>In a competitive marketplace, payroll platforms compete for customers by adding additional functions and services, such as:</p>
<ul>
	<li>24/7 access to payroll, compliance and HR experts.</li>
	<li>Integrations with other third-party software.</li>
	<li>Talent and appraisal management.</li>
	<li>Automated tax filing.</li>
	<li>Risk management functionality.</li>
</ul>
<p>Payroll expenses are often the most significant outgoing for a business, accounting for an <a href="https://fundsquire.co.uk/how-much-does-payroll-cost-companies-percentage-by-industry/" target="_blank" rel="noopener noreferrer">average of 70%</a> of expenditure. Payroll services help you to get the details right, without having to dedicate regular chunks of (unpaid) time to processing payroll.</p>

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Ben Taylor has been a professional writer since 2009, owning several sites of his own and writing for an array of global clients both large and small. A techie by trade, Ben has written for many comparison sites, covering diverse areas ranging all the way from software to lifestyle products.