Payment Gateway vs Virtual Terminal

Swipe, Click or Key It In—Pick the payment tech that fits your business

Choosing between a payment gateway and a virtual terminal is important when selecting the right payment processing solution. Payment gateways allow customers to enter their payment details directly online, for automated transactions on websites or apps. Virtual terminals are merchant-operated and payment details are manually entered for card-not-present transactions, like phone orders.

This decision between gateway or virtual terminal impacts your workflow, security, costs and customer experience. This guide covers the technical differences, security aspects, implementation needs and practical use cases, helping you determine which solution fits your business model, whether you operate an eCommerce store, manage phone sales or require both.

Payment Gateway vs Virtual Terminal: How They Differ

Payment gateways and virtual terminals serve different payment processing needs. This comparison breaks down their core differences:

| Feature | Payment Gateway | Virtual Terminal |
| —– | —– | —– |
| Data Entry | Customer self-service | Staff enters card details |
| Interface | Online checkout pages | Over the phone or in person |
| Hardware | No hardware needed | Browser-based |
| Best For | eCommerce and online sales | Phone orders and MOTO |
| Sales Volume | High-volume | Low to midvolume |
| Integration | Requires website or API setup | Simple browser access |
| PCI Responsibility | Shared with provider | Greater merchant burden |

Payment Gateway vs Virtual Terminal: How They Process Your Transactions

The workflows of these systems show how each serves different business needs. Here’s how each handles transactions from start to finish.

Virtual Terminal Process Flow

Virtual terminals need your direct involvement at every step. You log into your secure merchant dashboard, manually enter the customer’s card details, and then wait for the system to encrypt and transmit the data for authorisation. After receiving approval, you complete the transaction and generate a receipt. This merchant-facing approach gives you control but requires staff time for each transaction.

Payment Gateway Process Flow

Your customer selects their payment method on your website, enters their details into the secure checkout form, and the system handles everything automatically. Within seconds, the transaction is confirmed. This automated workflow eliminates manual steps and can process thousands of transactions at once.

Payment gateways deliver efficiency through hands-off processing, ideal for high-volume online businesses. Virtual terminals provide flexibility for phone orders, mail transactions or situations requiring personalised service during payment.

Payment Gateway vs Virtual Terminal: Impact on Customer Experience

Customer experience varies significantly depending on who’s handling the payment. Payment gateways offer self-service checkout where customers enter payment details directly, receive instant confirmation, and can save cards for future transactions. This supports mobile shopping and accepts a wide range of payment options, including credit cards, debit cards and digital wallets.

Virtual terminals rely on merchants manually entering payment details from calls or mail orders. This allows for a personal touch, but it increases the risk of entry errors and slows processing times. There are also elevated security risks from customers transmitting their payment information, and merchants must take care to ensure personal information and payment details are protected and that they adhere to PCI compliance standards. Virtual terminals generally support standard card payments and do not offer features like saved payment information or one-click checkout.

Use virtual terminals when human interaction matters—complex orders, payment plans or customers who prefer to talk through a transaction. Use payment gateways for fast, frictionless online purchases.

Payment Gateway vs Virtual Terminal: Implementation Considerations

Payment gateways require more technical integration. You’ll need developer support to connect fintech APIs, configure SSL certificates and set up webhooks for real-time updates. Low-code and no-code options like plugins and hosted checkout solutions can simplify the set-up process, but still require some set-up and may require developer support for customization.

Virtual terminals have a simple setup. Just log into your payment processor’s dashboard, no coding needed. However, this shifts operational responsibility to your staff, who must be trained on secure data handling, PCI compliance and fraud prevention since they manually enter transaction details.

Choose payment gateways if you want scalable, automated eCommerce. Use virtual terminals when you need a fast, no-code solution for phone orders or invoice payments.

Payment Gateway vs Virtual Terminal: Security Implications

Both payment gateways and virtual terminals must comply with PCI-DSS standards, but their security approaches differ.

Virtual terminals pose unique risks due to manual data entry. Human error and fraud risks increase when merchants enter payment details. This creates vulnerabilities that require strict access controls, secure network setup and thorough training. Your team must be able to identify suspicious activity and follow best practices for handling sensitive cardholder data.

Payment gateways come equipped with built-in security tools—including tokenisation, 3D Secure authentication and fraud detection. Reducing manual input means fewer chances for error or data exposure.

Payment gateways generally deliver stronger security thanks to fewer human touchpoints and smarter fraud prevention.

Payment Gateway vs Virtual Terminal: Industry-Specific Scenarios

Your industry, defined by your MCC classification, and business model determine which payment setup fits best. The right choice depends on transaction volume, customer interaction and workflow.

Payment gateways lead in high-volume, automated environments. eCommerce brands use gateways to process thousands of daily transactions, integrating with platforms like Shopify or headless commerce for easy checkout. SaaS companies automate recurring billing, no manual renewals, no missed payments. Digital streaming platforms and online marketplaces rely on gateways for customer-driven transactions at scale.

Virtual terminals thrive in personal, service-led industries. Law firms and consultants accept client payments by phone. Healthcare providers collect patient payments during phone consultations, preserving the personal touch. Mail-order businesses and B2B wholesalers enter payment details manually for orders.

For example, an online clothing retailer in London processes 5,000 automated transactions daily through a payment gateway with no manual input. A consulting firm in Berlin uses a virtual terminal for 20–30 client payments monthly by phone, providing personalised service that clients value.

Why You Should Use Both

Many businesses find that combining payment gateways and virtual terminals delivers the most effective payment strategy. This hybrid approach captures revenue across all channels and adapts to customer preferences.

For example, an online retailer runs most sales through its eCommerce gateway but uses a virtual terminal for phone orders or assisted checkouts. No lost sales regardless of how customers choose to pay.

SaaS companies automate subscription billing with gateways but invoice enterprise clients who prefer a more personal touch. Nonprofits also process donations via gateways and accept phone-based gifts with virtual terminals.

Most payment processors now offer both tools in a single dashboard with unified reporting. That means simple management, broader payment acceptance and fewer missed opportunities.

Choose the Right Setup

Whether you’re high-volume and digital-first or service-driven and hands-on, the right solution depends on how you sell and who you serve.

• Use gateways for scale and seamless online experiences.
• Use virtual terminals for personal touchpoints like phone sales or invoicing.
• Or use both to meet every customer where they are.

Why Choose Rapyd?

• Support for every industry—eCommerce, marketplaces, digital goods, online trading and more
• Direct Visa and Mastercard acquiring in the UK, Europe, Israel and Singapore
• Fast onboarding and high authorisation rates from a leading acquirer trusted by over 250,000 merchants
• Support for cards, Google Pay, Apple Pay and hundreds of local payment methods
• Online Payment Gateway, Virtual Terminals, Payment Links and more.

Get started with Rapyd today.