What is a Virtual Merchant?

In the world of eCommerce, many terms can be confusing for both novice and veteran business owners. Whether you’re developing a new eCommerce brand or extending a brick-and-mortar business into an online store, it’s critical to understand the basics of the digital economy.

This guide looks closely at the term “virtual merchants.” We’ll explore the definition of a virtual merchant, what a virtual merchant needs, and various related topics. Let’s jump in!

Virtual Merchant Definition

A virtual merchant is a type of business that allows customers to purchase goods or services online. Virtual merchants typically have an e-commerce website that allows customers to browse and purchase items using a credit or debit card.

Virtual merchants may also offer other payment methods, such as PayPal, Google Checkout, or Apple Pay. Virtual merchants typically ship the purchased items to the customer’s home or office. One of the most popular virtual merchant providers is Authorize.net.

There are many different types of virtual merchants, but some of the most common include online retailers, travel websites, and online service providers. Online retailers sell a variety of goods, such as clothing, electronics, and books. Travel websites allow customers to book flights, hotels, and rental cars.

Virtual Merchant Account Explained

A virtual merchant account is a type of account that allows businesses to process credit and debit card transactions without having a physical point-of-sale terminal. Virtual merchant accounts work by using a software application that is installed on a computer or mobile device.

This application allows businesses to process credit and debit card transactions by entering the card information into the system. Once the transaction is processed, the funds are deposited into the business’s bank account.

There are several benefits of using a virtual merchant account, including the ability to process transactions anywhere that has an internet connection, lower processing fees, and no need to lease or purchase expensive equipment.

In addition, virtual merchant accounts can provide businesses with the ability to accept multiple types of payments, including credit cards, debit cards, and ACH transfers.

If you are a business owner who is looking for a way to accept credit and debit card payments without having a physical point-of-sale terminal, then a virtual merchant account may be right for you. To learn more about how virtual merchant accounts work and to find one that fits your business needs, contact a merchant services provider.

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What Does a Virtual Merchant Need?

Virtual merchants are much more than online catalogs – they provide a full-scale online shopping experience. Let’s look at some of the tools you need to be classified as a virtual merchant:

Online Storefront

A virtual merchant will have an online storefront that allows customers to select products and services for purchase.

Shopping Cart

Many virtual merchants have digital shopping carts that allow customers to select items and hold them for purchase once they are done browsing the online storefront. This allows customers to purchase multiple products in a single transaction. However, if you only sell a single product or service, you may re-direct customers to your payment terminal immediately.

If you have a physical location and want to connect it with your online store, Shopify is a good option. It integrates well and also offers Shopify POS as an option to connect your offline store with your online store.

Online Shopping Cart

Payment Terminal

Once a customer is ready to “check out,” they need a secure payment terminal or gateway to process credit card transactions. Some virtual merchants will use independent credit card processing platforms, while others use popular payment services providers like PayPal and Square.

Integration With Backend System

Most virtual merchants will also integrate a backend system that manages stock, records sales, and performs other functions. This ensures the complete automation of the shopping experience for both the customer and the merchant. This is also a valuable tool if you want to integrate a brick-and-mortar inventory system with your online store.

Benefits of Being a Virtual Merchant

So, now that you understand virtual merchants and how they operate, you might be wondering: What are the benefits? Let’s explore below:

Create a Seamless Online Shopping Experience for Customers

Firstly, being a full-service virtual merchant makes it effortless for your customers to securely purchase goods and services online. By offering online payment processing, you make it simple to enjoy your products without heading to a brick-and-mortar location.

Expand Your Brick-and-Mortar Business

If you currently operate a brick-and-mortar business but want to expand your customer base by shipping directly to consumers, then becoming a virtual merchant can help. You can integrate your online and physical stores with POS software.

Open Up to International Customers

Many payment-processing platforms now allow you to process payments from international customers. If you want to tap into overseas markets, becoming a virtual merchant is a good first step.

Examples of Virtual Merchants

As eCommerce continues to grow in the United States, many virtual merchants are available to consumers. Let’s look at three examples below:


Amazon.com is the world’s largest online retailer. This virtual merchant had more than $120,900 million in revenue in 2020 alone. Amazon operates as both a direct seller and marketplace for third-party sellers. It also now has its own payment platform: Amazon Pay.

Legal Zoom

Legal Zoom is an example of a virtual merchant that sells services via an online store. Legal Zoom allows its customers to benefit from a range of legal services without leaving the comfort of their own homes. Whether you need to compile estate planning documentation or form a new company, you can purchase legal services on the Legal Zoom website.


The Gap is an example of a popular retailer that offers a sleek online store. You can browse new releases, sales, and other special offers. The website includes stock integration to ensure you don’t pay for a size that’s not currently available.

Virtual Merchant FAQs

Let’s check out some popular questions about virtual merchants:

What Types of Payments Platforms Can Virtual Merchants Use?

Virtual merchants can use payment processors, payment service providers, and a host of other payment platforms. It’s never been easier to accept credit card payments online!

Can You Integrate a POS System with a Virtual Merchant?

Yes. Many POS systems allow you to set up online stores, manage inventory, and more!

Are All Online Stores Virtual Merchants?

If an online store allows customers to process payments and facilitate all transaction elements, then it is a virtual merchant. However, it is not a virtual merchant if your store still requires in-person or over-the-phone payments.

Virtual Merchant: Final Thoughts

Now that you understand virtual merchants and the integral role they play in online commerce, it’s time to decide if you want to start an online store for your business. Check out our POS reviews on POS USA for more information on point-of-sale systems that allow you to build online stores!

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