Businesses can accept payments over the phone primarily by using a virtual terminal, which is a secure, web-based interface provided by a payment processor. Staff manually enter the customer’s card details into the system while on the call. Accepting payments over the phone can allow a business to reach new markets, capture sales they might otherwise lose, and create a more accommodating customer experience. But accepting phone payments comes with challenges, from data security considerations to higher processing fees.

Below, we’ll cover how businesses can accept payments over the phone effectively and securely.

What’s in this article:

• Is it possible to accept credit card payments over the phone?
  
• How to accept payments from customers over the phone
  
• What types of businesses need to accept payments over the phone?
  
• How much does it cost to accept payments over the phone?
  
• Benefits and risks of accepting payments over the phone
  
• Risks and considerations for accepting payments over the phone
  
• How Stripe Payments can help
  

Is it possible to accept credit card payments over the phone?

Yes—this process is often referred to as “MOTO” payments (Mail Order/Telephone Order). It’s a type of card-not-present (CNP) transaction, meaning that the business manually enters the customer's credit card information into the payment system, rather than having the customer present their card in person.

How to accept payments from customers over the phone

Accepting payments over the phone can work in a variety of ways depending on the payment method used and the business’s overall payment system. We’ll go through the general process of accepting payments over the phone using a service like Stripe. Please note that some details might vary depending on the specific payment processor.

1. Set up your account
   First, you need to set up a merchant account with a payment processing service. During this setup process, you'll provide the necessary business and banking information.

2. Use a virtual terminal
   Most payment processors provide what's called a “virtual terminal,” which is an online version of a physical credit card terminal or point-of-sale (POS) system. With Stripe, you can accept a built-in virtual terminal directly in the Dashboard.

3. Take payment details over the phone
   When a customer wants to make a payment, you will need to ask for their credit card information. This includes the card number, expiration date, and CVV code. You might also need their ZIP code or other identifying information, depending on the level of security verification that your processor requires. Ensure that you take payment details in a secure way and adhere to data protection best practices.

4. Enter the payment information
   In your virtual terminal, manually enter the customer's credit card information and the amount to be charged. For Stripe, this is done in the Payments section of the Dashboard, by clicking “+Create” and then “Payment.”

5. Process the payment
   Once you've entered the necessary information, you can submit the payment for processing. The payment processor handles the transaction with the cardholder's bank and updates you when the transaction is approved or declined.

6. Provide a receipt
   After the transaction, you should provide a receipt to the customer. Many payment processors can automatically send a digital receipt via email. In Stripe, you can do this by toggling “Send a receipt email” when you create a payment.

7. Maintain proper records
   Keeping track of transactions is vital for accounting and potential dispute resolution. Your payment processor should provide detailed records of each transaction, accessible through your merchant account dashboard.

8. Comply with data regulations
   Since you're dealing with sensitive personal information, it's important to ensure all conversations and data handling comply with PCI-DSS regulations. Use encryption, avoid writing down credit card information, limit employee access, and never store card data without proper security measures in place.

What types of businesses need to accept payments over the phone?

Several types of businesses can benefit from accepting payments over the phone due to their specific operational models or customer service strategies:

• Service providers
  Businesses providing services like home repairs, consulting, or catering may find phone payments useful for securing bookings or taking deposits.

• Remote sales businesses
  Companies that sell products over the phone, such as telemarketers or catalog-based businesses, can use phone payments to process payments during a call.

• Restaurants and takeaways
  Establishments offering food delivery or pickup services often take card payments over the phone.

• Travel agencies and hotels
  These businesses may take payments over the phone for bookings, especially for customized travel plans or group bookings.

• Medical practices and pharmacies
  Health services can take phone payments for telehealth appointments or prescription orders.

• Professional services
  Lawyers, accountants, or freelancers may take phone payments for their services, particularly for retainer fees or invoices.

How much does it cost to accept payments over the phone?

The cost to accept payments over the phone will depend on your payment processor and the terms of your merchant agreement.

Generally, because such payments are considered CNP transactions, the fees can be higher than for in-person, card-present transactions. This is due to the elevated risk of fraud and chargebacks that come with card-not-present transactions.

The cost of these CNP transactions generally fall into two pricing models: flat-rate and interchange-plus. Flat rates, which often incorporate a percentage of the transaction value as well as a small fee, are simpler to understand but often padded to cover interchange costs. Interchange-plus transactions can be more complex, but offer greater transparency and lower costs in the long term for high-volume businesses.

These rates are subject to change and may be different based on your specific agreement with the processor. There may be additional fees associated with chargebacks, refunds, international transactions, or the use of a virtual terminal.

Benefits and risks of accepting payments over the phone

Accepting payments over the phone provides businesses with a convenient and flexible way to process payments from customers. For many businesses, it can also open up new sales opportunities. Like all methods of payment, it comes with its own set of advantages and potential drawbacks.

Benefits of accepting payments over the phone

• Convenience and accessibility
  Phone payments can be made from anywhere customers have phone service, providing a convenient option for customers who may not be able to visit your physical location or navigate your online payment system.

• Improved cash flow and optimized revenue potential
  By allowing immediate payment, over-the-phone transactions can help to capture sales that might not take place otherwise. Businesses can quickly secure bookings, orders, or services, reducing the risk of unpaid invoices.

• Personalized customer service
  Phone transactions allow businesses to engage with customers directly, answer any questions, and upsell or cross-sell products or services.

• Expanded customer base
  With the ability to take payments over the phone, businesses have the potential to reach a wider customer base, including people who prefer phone transactions or are unlikely to engage with online payments.

Risks and considerations for accepting payments over the phone

• Higher processing fees
  Payments over the phone usually have higher processing fees since they are considered CNP transactions and have a greater risk of fraud and chargebacks.

• Increased risk of fraud
  Because payments over the phone do not involve a physical card that businesses can verify, these transactions can be more susceptible to fraud. Businesses need to take necessary precautions to verify the identity of the caller and authenticity of the card information provided and use secure payment systems.

• Data security
  Handling sensitive card information over the phone requires adherence to PCI-DSS (Payment Card Industry Data Security Standard) rules to protect customer data. These standards are more difficult to ensure when dealing with payments over the phone. Failure to comply with these standards can lead to fines.

• Manual entry errors
  Manually entering card information increases the possibility of human error, which can lead to transaction issues and customer dissatisfaction. When handling a credit card decline over the phone, it’s best to shift the narrative from financial to technical—such as explaining the decline as a system issue or security flag.

While accepting payments over the phone can offer important advantages for businesses, it's crucial to implement rigorous security protocols and train staff appropriately to manage associated risks.

How Stripe Payments can help

Stripe Payments provides a unified, global payments solution that helps any business—from scaling startups to global enterprises—accept payments online, in person, and around the world.

Stripe Payments can help you:

• Optimize your checkout experience: Create a frictionless customer experience and save thousands of engineering hours with prebuilt payment UIs, access to 125+ payment methods, and Link, a wallet built by Stripe.
  
• Expand to new markets faster: Reach customers worldwide and reduce the complexity and cost of multicurrency management with cross-border payment options, available in 195 countries across 135+ currencies.
  
• Unify payments in person and online: Build a unified commerce experience across online and in-person channels to personalize interactions, reward loyalty, and grow revenue.
  
• Improve payments performance: Increase revenue with a range of customizable, easy-to-configure payment tools, including no-code fraud protection and advanced capabilities to improve authorization rates.
  
• Move faster with a flexible, reliable platform for growth: Build on a platform designed to scale with you, with 99.999% historical uptime and industry-leading reliability.
  

Learn more about how Stripe Payments can power your online and in-person payments, or get started today.