Buddy the Banking Badger

Buddy’s Money Saving Tips

Short videos from Buddy with practical ways to keep more money in your business. Pick a tip below to watch.

Virtual Terminals: Useful, But Priced Like Keyed Transactions

A virtual terminal is genuinely useful software: a web-based interface that lets you manually key in a customer's card details to process a payment without needing a physical card reader present — handy for phone orders, mail orders, or any situation where you're taking payment information verbally or from a written form rather than swiping a card in front of you. Because a virtual terminal transaction is, by definition, card-not-present, it carries the same higher "keyed" interchange rate that applies to any manually entered payment — there's no special discount for using virtual terminal software specifically; it's simply a convenient interface for a transaction type that was already going to carry a higher rate regardless of the tool used to enter it. On top of that transaction-level cost, many processors also charge a separate monthly access or license fee just for providing the virtual terminal tool itself, distinct from your per-transaction processing costs. None of this makes a virtual terminal a bad choice — for businesses that genuinely need to take phone or mail orders, it's often the most practical option available. The useful mindset is simply not to expect it to be cheaper than any other card-not-present method, and to factor in both the transaction-level keyed rate and any standalone monthly fee when evaluating the true total cost of offering this payment option to your customers.

More tips from Buddy

A Regular Statement Review Most merchants have never had someone actually explain every line of their statement to them — and that gap is exactly where avoidable fees hide. A regular statement review (annually, or any time your processor changes pricing) is often the single highest-ROI thing a business owner can do for their bottom line.

Interchange Back on a Refund When you refund a sale, you generally don't get back the interchange fee you originally paid — even though the money is going back to the customer. Some processors do return a portion; most don't automatically. It's a good line item to specifically ask your processor about, since it affects the true cost of any return-heavy business.

Virtual Terminals: Useful, But Priced Like Keyed Transactions A virtual terminal lets you manually process phone or mail orders through a web browser — handy for taking payment without a physical card reader. But because the card isn't present, expect the same higher, "keyed" interchange rate that applies to any card-not-present transaction, plus sometimes a separate monthly access fee for the tool itself.

CVV Checks: A Small Check With a Big Fraud Impact Requiring the 3- or 4-digit security code on the back (or front, for Amex) of a card adds negligible checkout friction but meaningfully reduces card-not-present fraud, since that number isn't stored on a card's magnetic stripe or chip. If you're not requiring it on every online or phone transaction, it's one of the easiest fraud-prevention wins available.

If You Surcharge, Follow the Rules Exactly Card networks set hard limits regardless of state law: surcharges are capped around 3% (Visa) or the lower of your actual processing cost, must be clearly disclosed with signage and on the receipt, and can never be applied to debit or prepaid cards — even ones that route as "credit." Getting this wrong risks losing your surcharging privileges or your merchant account entirely.