Key Takeaways
- A virtual terminal lets your team start a payment for a customer who isn’t at your counter, without a card machine.
- From 1 April 2026, RBI requires two-factor authentication for domestic digital payments, unless exempted.
- In India, payment links offer an alternative for remote collections that your customer completes on their own phone.
- A payment gateway is the technology underneath a virtual terminal. A POS terminal handles payments at your counter.
Imagine you’re a small business owner, and a customer calls and wants to pay for an order right now. But you don’t have a website or a card machine as of now.
How would you take the money?
One common piece of advice is to type the customer’s card details into a virtual terminal. But the catch with it is that from 1 April 2026, RBI’s authentication directions require domestic digital payments to use two authentication factors, unless exempted.
And when the card isn’t physically with you, one of those factors has to be created for that single payment, like an OTP sent to your customer.
For Indian businesses, payment links provide a practical alternative. Let’s understand virtual terminals, remote collections in India, and how they compare with a payment gateway and a POS machine.
What Is a Virtual Terminal?
A virtual terminal is a payment tool that lets you or your staff start a payment for a customer who isn’t at your counter (or, physically present with you). You can use it online, through a browser or an app from your payment provider. It turns your laptop or phone into a payment point, so you don’t need a card machine.
Card payments made this way are card-not-present (CNP) payments. You can use it to:
- Take deposits for bookings
- Collect payment against invoices
- Collect fees for classes or memberships
- Collect dues from business customers
- Close orders that customers place on WhatsApp or Instagram
How Does a Virtual Terminal Work Online?
The payment flow depends on your provider and local authentication requirements. In a traditional virtual terminal, staff enter the amount and card details, then submit the payment for bank authorisation. For payment-link-based collections in India, here’s what the flow looks like:
- You log in to the dashboard your payment provider gives you.
- You enter the payment amount and your customer’s details, then share a payment link. Your customer enters their payment details and authenticates the payment.
- Your provider’s payment gateway sends the request to the card network and your customer’s bank (or to UPI, if they’re making the payment this way).
- Your customer’s bank approves or declines it.
- Based on whether you have received the payment or not, it’s recorded in your dashboard, and you can match it against your orders later.
How It Works in India: Your Customer Approves the Payment
As we discussed earlier, RBI requires two-factor authentication for domestic digital payments from 1 April 2026, unless exempted.
With a payment link, you only create the payment request. Your customer pays and authenticates it on their own phone through a payment link, a QR code, or a link sent by SMS.
Virtual Terminal vs Payment Gateway: What’s the Difference?
A payment gateway is the technology that securely carries your customer’s payment details between your business, the card networks, and the banks. A virtual terminal is one way to use a gateway. If you’re choosing a virtual terminal payment gateway, check support for staff-entered payments and authentication in your market.
So, with a virtual terminal, your team has to start the payment from a dashboard, while with a gateway checkout, your customer can pay right on your website or app without your team having to step in.
Here are some quick differences between a traditional virtual terminal and gateway checkout.
| Feature | Virtual terminal | Payment gateway checkout |
|---|---|---|
| Who starts the payment | Your team | Your customer |
| Where payment details are entered | By staff in the provider’s secure form | On your website or app checkout |
| Website or app needed | No | Yes |
| Setup | Log in to a dashboard | Integrate the gateway into your website or app |
| Best for | Phone orders, invoices, deposits, and field collections | Online orders that customers place on their own |
Many businesses use both of them. The gateway handles checkout on the website, and payment links cover payments that happen outside it. You can read about it here on payment gateways vs payment links to understand when to use each.
Virtual Terminal vs POS Terminal
The two terms sound similar, but each covers a different situation:
- POS: Point of sale is where your customer is billed, for instance, your store counter.
- POS terminal: It’s the machine at that counter that reads your customer’s card or accepts a UPI payment. Card taps, dips and swipes are card-present payments because your customer uses the physical card at the point of payment.
- Virtual terminal: This is what you use when your customer isn’t physically present at your counter: the card-not-present payments.
Through a letter to NPCI dated 2 September 2026, RBI has added UPI Tap & Pay on NFC-enabled POS machines to its list of exemptions from two-factor authentication. Ordinary phone and mail orders have no blanket exemption.
There’s also a middle option. A softPOS turns an Android phone into a POS terminal, so you can take in-person payments without buying a card machine.
How Cashfree Helps You Take Payments Without a Website or Card Machine
Cashfree gives you three tools for remote and in-person collections without a dedicated card machine. All three come free with the Cashfree Payment Gateway.
Payment Links for Remote Orders
With Cashfree Payment Links, you create a link from your dashboard, through the API, or in bulk by uploading a CSV file. All you have to do to get the payment is send the link to your customer on WhatsApp, SMS, email, social media, or an invoice, or you show it as a QR code.
Your customer opens the link and pays on Cashfree’s checkout using UPI or any of the 180+ payment methods Cashfree supports. You can also accept partial payments, set an expiry date, and send automated reminders. Cashfree reports that its WhatsApp-native links convert up to 1.5x better than standard links.
softPOS for In-Person Payments
Cashfree softPOS turns an Android phone into a payment terminal. Your staff can accept UPI QR payments, contactless card taps over NFC, and payment links with it, and offer your customers EMI on UPI QR.
It’s best for delivery agents and teams that collect payments door to door.
Payment Forms for Repeat Collections
Cashfree Payment Forms enable you to collect fees, registrations, and other repeat payments through a custom form.
Cashfree charges zero setup fee for the gateway, and the three tools above cost nothing extra. Transaction charges and offer conditions still apply. If you sign up as an eligible new merchant on or after 21 July 2026 and complete onboarding, Cashfree’s festive offer gives you:
Cashfree’s current offer
- 0% platform fee: On your first ₹20 lakh of eligible domestic sales
- T+1 settlement: Payments settled to your bank account by 8 PM the next day
- Offer window: The campaign runs until 31 March 2027
Offer exclusions and fair-usage conditions apply. GST remains payable under the offer terms; 0% platform fee does not mean every charge is waived.
Cashfree is an RBI-authorised payment aggregator and PCI DSS compliant.
Collect Remote Payments With Cashfree
For ordinary one-time remote payments in India, your customer authenticates the payment. A payment link lets them complete it on their own phone.
Start by listing every place remote payments reach you: phone calls, WhatsApp chats, invoices, and field visits. Send a payment link for each one instead of asking for card details. Use softPOS when you meet customers in person and don’t have a card machine. Keep your payment gateway for checkout on your website.
Sign up with Cashfree Payments before 31 March 2027 to access 0% platform fee on your first ₹20 lakh of eligible domestic sales, subject to offer terms.
Get Started With CashfreeFAQs About Virtual Terminals
How does a virtual terminal work for phone orders?
You log in to your payment provider’s dashboard and create a payment for your customer. Traditional terminals support staff-entered card details; payment links let Indian customers enter details and authenticate on their own phone.
What is a virtual payment terminal?
It’s another name for a virtual terminal. It’s an online tool that lets your business take payments from customers who aren’t physically with you, without a card machine.
Is Google Pay a payment gateway?
No. Google Pay is a UPI app that your customers use to pay, and NPCI lists it as a third-party UPI app. To accept payments from Google Pay users on your website, your business can use a payment gateway.
What is the difference between a POS and a terminal?
POS is the place where your customer is billed, such as your store counter. The terminal is the machine at that counter that reads your customer’s card or accepts a UPI payment (HDFC Bank).
Can I use a virtual terminal online without a website?
Yes. A provider-hosted virtual terminal needs no website. For Indian businesses, a Cashfree payment link works as the checkout page, so your customer can pay without visiting a website.
Can I take card payments over the phone in India?
Yes, but your customer has to authenticate the payment, and in India this is usually done with an SMS OTP. Send your customer a payment link during the call instead of asking for their card details.
Is a virtual terminal the same as a payment link?
No. With a traditional virtual terminal, staff enter card details. With a payment link, you create the payment request, and your customer completes it on their own phone.
Is a virtual terminal safe?
RBI requires two-factor authentication for domestic digital payments, unless exempted. If your customer loses money on a payment that skipped these rules, the customer’s card issuer must repay the customer in full. Check that your payment provider is PCI DSS compliant.
Can my business accept Google Pay through a payment gateway?
Yes. Cashfree’s UPI lets your customers pay with any UPI app, including Google Pay and PhonePe.
Can my phone work as a POS terminal?
Yes. Cashfree softPOS turns an Android phone into a POS terminal that accepts UPI QR payments and contactless card taps.
What changed in RBI’s payment authentication rules in 2026?
From 1 April 2026, domestic digital payments need two-factor authentication, unless exempted. When the card isn’t present, one factor must be unique to that payment. In September 2026, RBI exempted UPI Tap & Pay on NFC-enabled POS machines from the two-factor requirement.
