The Federal Reserve counted 236.6 billion noncash payments in 2024, and cards accounted for more than three quarters of them by number. A large share of that card volume never involved a physical card at a counter. Customers read numbers over the phone, typed them into a form sent by email, or handed them to a technician standing in a driveway. Any business collecting money that way needs a method for entering card data into a payment system without hardware on site. That method is a virtual terminal, and most owners discover they need one only after a customer's card number has already been written on a sticky note.

The Function of a Virtual Terminal

A virtual terminal is a secure web page inside a merchant account where a staff member types a customer's card number, expiration date, security code, and billing address. The transaction then processes as card-not-present, the same classification applied to online checkout. No countertop hardware is involved, and no card is swiped or tapped.

Card-present transactions have lower interchange rates because the physical card and often a chip authentication reduce the odds of fraud. Keyed transactions cost more per sale and put the merchant on the hook when a cardholder disputes the charge. A small business choosing this method is accepting a higher per-transaction cost in return for the ability to take money from anywhere.

Business Models Built on Keyed Entry

Some operations have no realistic alternative. A plumbing company sends technicians to houses and collects at the kitchen table. A wholesale distributor invoices twenty accounts a month and takes card numbers by phone when a client wants to pay early. A consultant closes work on a video call and needs payment before the next engagement begins.

Checks made up 26% of business-to-business payments by 2024, down from 81% in 2004, which means the money that used to arrive by mail now arrives some other way. Collection remains slow regardless of method. Roughly 55% of invoiced business-to-business sales in the United States go past their due date, and the average small business is owed more than $17,000 in unpaid invoices. When a client finally agrees to pay, a company that can key the card immediately collects in ninety seconds. A company that has to mail an invoice waits another cycle.

Company size predicts the gap. An NFIB technology survey of 521 small firms conducted in March 2025 found that businesses with the fewest employees were the least likely to have a website or to accept payments through one, which leaves the phone and the field visit as the two channels actually available to them. For a two-person operation, keying a card is often the only collection method the business has.

Triggers for Leaving Manual Collection

The most common trigger is a staff member writing card numbers on paper. It happens constantly in service industries and it creates a liability that no insurance policy covers well. A second trigger is repeat billing handled by memory, where an office manager keeps a spreadsheet of clients who owe money monthly and processes each one by hand. Both habits slow collection, and slow collection is how profitable companies run out of cash while their books still show a healthy year.

Companies in that position generally move to virtual terminals for payment card processing alongside a hosted checkout page and a stored payment method for repeat customers, so one record covers phone orders and the invoices that follow them. The operational gain shows up in record-keeping. Every transaction enters the same reporting system, which turns month-end reconciliation into a report someone pulls in a few minutes.

Hardware Cost Comparison

Countertop terminals have to be bought or leased, then eventually replaced when card network requirements change. A virtual terminal requires a browser. For a business processing forty keyed transactions a month, the hardware savings alone justify the setup.

Keyed entry has higher interchange, and dispute exposure is higher as well. Chargeback rates on card-not-present transactions are generally between 0.6% and 1% of transactions, against roughly 0.5% for card-present sales. On 400 sales a month that gap is one or two additional disputes, which sounds minor until the documentation question comes up, because a merchant who cannot produce a signed work order or a delivery confirmation loses most disputes by default.

Security Requirements for Keyed Transactions

Card-not-present fraud accounts for about 65% of credit card fraud losses, and losses in the United States were projected to pass $12.5 billion in 2025. Globally, card-not-present fraud is forecast to reach $28.1 billion by 2026. Research from the Federal Reserve Bank of Kansas City has tracked how far the two fraud rates have separated since chip cards arrived. A business keying cards is operating in the category criminals target most.

Three controls reduce most of the risk. Address verification compares the billing address given by the customer against the issuer's record and blocks common mismatches. Security code entry confirms the person has the physical card in hand. Data tokenization replaces the stored number with a substitute value, so a breach of the business system yields nothing usable.

Staff process matters as much as software. Card data should never be written down, never repeated aloud in a room with other customers, and never stored in a customer relationship file. Recorded phone lines need to pause during card entry. These habits are dull to enforce, and they are the first thing a compliance assessor asks about.

Cases for a Different Tool

A virtual terminal is a poor fit for a walk-in retail floor. Keying a card that is already in front of the cashier costs more and invites disputes for no reason. High-volume e-commerce business belongs in a hosted checkout, where the customer does the typing and the merchant has less compliance burden.

Large business-to-business payments often belong on the automated clearing house network instead, which moves money as a bank-to-bank electronic funds transfer rather than a card authorization. ACH accounted for close to three-quarters of noncash payment value in 2024, and for a $60,000 invoice, the flat bank transfer fee beats card interchange by a wide margin. Most companies end up with two or three collection methods rather than one, with keyed entry reserved for the situations that genuinely require it.

Adoption Timing for Most Businesses

Add up the payments each month that arrive by phone, by emailed invoice, or in the field, and compare that number against the payments taken at a counter. When the first group passes ten transactions monthly, or when any staff member has written a card number on paper in the past quarter, the setup pays for itself in reduced risk before it does anything for revenue. Open the merchant account, enable keyed entry, and write a one-page procedure covering what staff may and may not record on paper. That document is the piece most owners skip, and it is the piece an auditor asks for first.