What is a traditional virtual POS for Web sites?

When requesting a traditional virtual POS for a website we have to be very aware that the risk of our business will play an important role. In the market of digital payment methods by card on the website, there are 2 types of terminals, on the one hand we have traditional virtual POS terminals and on the other, non-traditional virtual POS terminals that run under 3D Secure protocol.

As we have mentioned in previous articles, when analyzing your company and its commercial activity the bank will examine the risk of money laundering and fraud attributing to your business a high or low level of risk. If the bank considers it low risk the process of obtaining a virtual TPV will be faster, the entity may require you to pledge an amount of money to avoid any late payment and that's all.

In the opposite case, if the bank officer detects that your company runs a high-risk business or it does not comply with Visa, MasterCard or Amex regulations, don't waste your time! The bank will decline your request. 

What is a traditional POS without 3D Secure?

Traditional POS without 3D secure can be requested to a financial entity of a merchant account number issued by an acquiring bank, authorized by the main card brands. The main characteristic of this terminal is charging debit or credit cards without a security PIN, by means of a software or payment gateway.

The particularity of this traditional POS lies in the configuration that doesn't include security rules, that is, when your client prepares to make a payment on your website, the system will not require any type of card validation in order to charge the payment.

The traditional POS is the terminal most requested by customers. Why? In many countries of the world, for example the United States, banks do not require their customers to introduce the 3D security PIN in digital card transactions. What does this mean? If you have a virtual POS without traditional mode and your client wants to make a purchase, the operation will be declined. In this specific case, your payment terminal is the one that obliges you to collect the payments with 3D Secure security PIN and the card, since it does't include this protocol, will be not authorized for the payment.

Differences between traditional POS and non-traditional POS

The differences between traditional POS and non-traditional POS are the following:

• The traditional POS terminal can charge all cards issued in any country in the world, it has no restrictions. The non-traditional virtual POS can only charge cards that are configured for 3D Secure security pin introduction.
• The risk of chargebacks in payments made through traditional terminal is higher than among those made via the non-traditional one. Since the system does not require a security PIN during checkout process, it is more vulnerable to fraud and greater precautions must be taken.
• The configuration of both terminals is very simple. In the case of the traditional POS terminal, it is possible that the PCI DSS payment gateway asks you to upload a file in PHP to your servers, called “Server to Server" so that the client can introduce the card data. In the case of the non-traditional terminal, the customer will be redirected to the webpage of the bank where he will have to make the payment, but what is the difference? 
• The CMS integration in a website with WooCommerce, PrestaShop, Magento, Zen Cart, VirtueMart, WHMCS and OctoberCMS is very fast for both types of terminals. Just read the manual and download and install a plugin provided by the gateway.
• The commissions of the traditional virtual POS are more expensive than for the non-traditional one. The higher is the risk to the entity, the higher are the commissions.
• When requiring both terminals, the bank will force your website to operate under SSL. If you want to request a POS without 3D secure for your website, it is possible that the entity forces you to certify your merchant with PCI DSS. That means that when the client requests POS, the banks will guarantee that the card numbers and payment templates will be stored on the merchant's servers and not on the servers of the payment gateway with which the bank works. To avoid responsibilities the entity will force the merchant to save it on servers certified with PCI.
• In reference to card brands, both payment systems support all types of cards available on the market: Visa, MasterCard, Amex, Diners Club, Maestro, Discover, JCB and Union Pay.
• If the POS terminal is considered of high risk, the financial institution will make payment to your account within 3-5 weeks. If it is considered low risk, the bank could release the funds within 1-2 days. As we mentioned above, to avoid late payment, the bank may request a security deposit or rolling reserve.

The cost of virtual POS for web pages

As we mentioned earlier, traditional virtual POS terminals for websites are more expensive. Payment institutions and banks usually charge the following fees:

• POS Activation: Generally it is free or you can be charged a monthly fee that will range between 12-25 euros.
• Commission for transaction OK: This commission will depend on the risk level of commercial activity, generally the costs are between 2.5% and 6.5%.
• Commission per transaction KO: Are usually equal to 0, if there are no “OK transactions” there are no commissions.
• Commissions for pre-authorizations: Some gateways usually have pre-authorization systems so that the merchants can verify if their clients have fund available on the card or not. The commissions charged for this service are from 0.10 to 0.35 ct. Euro.
• Fee for chargebacks: Fees will vary between the cost for the OK transaction or a fixed price, which is usually between 15 and 25 euros.
• Commission for refund: Refunds usually come free of charge or you can be charged small fixed amount, which is usually between 2-15 euros.
• Commission for wire transaction to the merchant's bank account: Banks do not usually charge anything for this kind of transactions, but payment institutions can charge you a fixed amount that will depend on the country of destination of a payment. If for example, the payment should be made to a bank account of the same country, the cost will usually be from 2 to 5 euros. Within the European Union, the price will be 15-20 euros and if it is outside the European Union the price is 50-70 euros per transaction.
• Commissions for the use of APIs and CMS modules: Payment gateways usually make the API and integration modules available for free.

8 tips to request virtual POS terminal

The 8 essential tips to request virtual POS from our company, a bank or a payment institution, are the following:

• Never lie: Payment system officers are familiar with all the tricks that a client can do in order to commit fraud. Never lie about the nature of your business.
• Do not negotiate prices with the bank: Financial entities like to play according their own rules. Payment gateways without 3D are the most difficult to obtain, and therefore are more expensive. If you can't assume this expense, do not hire it, you always have the option to hire a cheaper low-risk virtual POS.
• Think about registering a company: Card brands and the banks do not grant individuals with traditional terminals. However, payment entities can make exceptions.
• Always declare actual figures: The bank officer will ask for information on your turnover, average sales ticket, monthly and annual transactions volume. Always tell the truth! Saying that you have a higher-than-normal income does not mean that you will have more possibilities on obtaining a virtual POS terminal. Note that higher amounts equals higher money laundering risk and the bank take into consideration this ratio. It is better to say that as you business is new, you still don't have this information. 
• Prepare the list of countries of incoming transactions: One of the key questions in the opening process is from which countries will the card transactions come from? Avoid naming high-risk continents, such as Africa or tax havens. If you don't know the country where sales come from, say so. The officer will understand that they are coming from your country of residence and the risk of fraud will be minimal.
• Name the country where you have your bank account: If you have contracted the service directly with your acquiring bank you can skip this advice, since the bank will pay you for the sales in the bank account that you have associated with the entity. But if you contract the service with a payment institution, they usually give you options to pay you to any bank account. Avoid giving bank account numbers in high-risk money laundering countries, such as: Panama, American Samoa, Bahamas, Botswana, North Korea, Ethiopia, Ghana, Guam, Iran, Iraq, Libya, Nigeria, Pakistan, Port Rico, Samoa, Saudi Arabia, Sri Lanka, Syria, Trinidad and Tobago, Tunisia, the US Virgin Islands and Yemen.
• Read the contract very carefully: Read the contract carefully and if you have any doubts talk to your agent. Traditional virtual POS contracts have all the clauses to the favor of the bank and the entity may terminate the contract at any time without notification.
• Stay calm: The bank agent will stress you to analyze each transaction by card to discover the fraud in your terminal. Look at the issuing country, delivery address, telephone numbers, registration email and the amount charged. You are responsible for all transactions and the entity will look the other way when you see that a fraudulent transaction has been cast. Also keep in mind that the card brands only accept a 1% fraud rate, if you exceed this amount, the bank will make a courtesy call to finish a contract with you.