In this article, we’ll explain how you can accept card payments over the phone using a virtual terminal or card machine.
We’ll summarise the cost, security and scalability implications of each method and discuss why we thinkvirtual terminalsare normally the best option for most businesses taking card-not-present payments via telephone or mail.
Choose Your Preferred Method: Virtual Terminal Machine Or Card Machine
There are two ways you can accept card payments over the phone. You can either use software called a virtual terminal, which allows you to type customer card details and process payments securely, or use a card machine with Mail Order/Telephone Order (MOTO) functionality to manually enter the card details and process the payment.
Virtual Terminals vs Card Machines For Accepting Phone Payments
| Virtual Terminals | Card Machines | |
| Scalability | Payments can be made concurrently on any device that can access the virtual terminal software (i.e. POS system, computer, laptop, tablet or phone). | You can only take one payment per machine at any time. |
| Connectivity | Internet connection required. | You can choose card readers that use a phone line, WiFi or both. |
| Fixed Cost | Relatively low software costs with great economies of scale. | Can be expensive if you need several machines. |
| Chargebacks | Banks can be quick to issue chargebacks for MOTO payments whichever method is used. | |
| Transaction Fees | As these are customer-not-present (CNP) transactions, processing fees tend to be higher than payments taken face to face (~1% can be added to processing fees). | |
| Flexibility | Take payments in-person, over the phone or by any other means as long as the customer can present their payment details. | |
| Security Risks | Potential for human error when manually typing in payment details. Staff writing down payment details before entering details. | |
If you want to take a lot of payments over the phone, then a virtual terminal is the way to go. This is the most secure option and the best solution for taking phone payments at scale.
Card readers with MOTO functionality are suitable if you’re only taking the occasional order over the phone.
If your business accepts a significant volume of payments in-person and over the phone, then you can opt for an all-in-one POS, card machine and virtual terminal solution to cover all of your needs.
How To Take Phone Payments With A Virtual Terminal
Taking payments over the phone with a virtual terminal is very similar to making an online payment through a payment gateway.
The only difference is you input your customer’s card details into your virtual terminal on their behalf as they’re not present to complete the transaction themselves.
When your customer is ready to make the payment, simply follow these five steps:
Step #1: Log In To Your Payment System Account
Log into your payment system and open the virtual terminal to take a payment over the phone. With most payment systems, this will be labeled as “Virtual Terminal” although some may simply call it “Terminal” or another variation.
Step #2: Enter Price and Transaction Details
With your virtual terminal open, start typing in the payment amount and confirm with customers that they understand the amount being charged to their card.
This is a small step that can prevent any nasty surprises that may result in chargebacks – a risk that always exists when card numbers are provided over the phone.
Next, ask the customer to provide their payment details:
- Name (as it appears on the card)
- 16-digit card number
- Card expiry date
- CV2 security code
Your virtual terminal may also ask you to add a description for the payment. This is another opportunity to confirm the payment details description with the customer to prevent any claims the payment was taken without their approval.
Step #3: Ask the Customer For The Name & Address Associated With The Card
As the customer isn’t present for the transaction, you’ll also need to provide security information associated with the card to make the payments. This typically includes the following:
- First name
- Last name
- First line of address
- Town/city
- Postcode
- Country
Your virtual terminal may include other optional fields to collect additional information, such as an email address, which can be useful for sending purchase confirmations and receipts – another useful step that helps prevent chargebacks.
Virtual terminals use the Address Verification Service (AVS) to verify the identity of the cardholder and approve the transaction for processing.
Step #4: Verify Transaction With Address Verification Service
Once you’ve completed the payment form, quickly confirm with the customer that you’ve got all of the details entered correctly.
Virtual terminals use the Address Verification Service (AVS) to verify the identity of the cardholder and approve the transaction for processing.
Manually inputting customer’s data always comes with an increased risk of human error so it’s vital you get all of these details correct. It’s better to confirm at the first attempt than have to ask again after a transaction fails.
Step #5: Finalize Transaction & Send a Receipt
Once the transaction is verified, you should receive confirmation that the payment has been processed within a few seconds.
Let the customer know that their payment has been successful and their order will be processed as soon as possible.
At this point, you want to send a receipt to the customer. Email receipts are perfect for this but some customers may want a physical receipt mailed to them.
If this is the case, it’s still recommended to send an email receipt as confirmation of the payment and the amount so there’s little room for debate or cancellation when the physical receipt arrives.
How To Take Phone Payments With A Card Machine
If you only take card payments over the phone occasionally, you can do so with a MOTO-enabled card machine by following these five steps:
- Transaction details: Enter the purchase price, customer’s credit card number, expiry date and security code.
- Confirm: Press “Clear” when the machine asks if the customer is present.
- Address: Enter the customer’s house number and postcode.
- Customer receipt: Tear the printed customer’s receipt copy and press enter.
- Merchant receipt: Tear the printed merchant’s receipt copy and press enter.
Keep in mind that card payments taken over the phone using a card machine are more liable to chargebacks than those taken through a virtual terminal.
Make sure you confirm the price of any transaction with customers and, if possible, send them electronic copies of receipts at the time of purchase while physical receipts are sent in the post.
You’ll also want to comply with all the necessary security regulations to protect your business against any claims of fraud.
Make Sure You Are PCI-DSS Compliant
Phone payments are often the most vulnerable to fraud so you have to take steps to protect your customers, as well as your business.
Make sure you’re compliant with the Payment Card Industry Data Security Standard (PCI-DSS) regulations when handling payment details and any confidential customer data.
Failing to meet your obligations as a merchant can result in hefty fines in the event of a security breach.
What Is The Cost Of Taking Payments Over The Phone?
This depends on the supplier you choose and the pricing structure they have in place.
A growing number of payment providers are offering free virtual terminals at no additional cost other than their standard transaction fee for remote card payments.
For example, Square and SumUp simply charge a 2.50% transaction fee on card payments taken over the phone through their virtual terminals with no monthly fees.
Keep in mind that many providers charge a monthly fee for their virtual terminal, in addition to the transaction fees applied to each payment.
In the case of PayPal, the company charges a flat £20/month fee for its virtual terminal and a transaction fee of 2.90% + 20p for payments taken over the phone in the UK. PayPal’s virtual terminal isn’t the cheapest option but its transaction fees for in-person payments can be as low as 1% for merchants processing more than £15,000/month.
Like PayPal, many payment providers offer variable fees through bespoke packages, depending on sales volumes, average transaction values and several other factors.
These rates are priced on application and there’s often room for some negotiation if you know how to emphasize the long-term value of your business.
If you don’t have a lot of experience dealing with payment service providers, we can help you choose the ideal provider for your needs and negotiate the best deal on your behalf.
| Provider | Monthly Fee | Transaction Fee |
| Square | £0 | 2.50% |
| SumUp | £0 | 2.50% |
| PayPal | £20 | 2.90% + 30p |
| Paymentsense | £15.11, £17.42 or £19.53 | N/A |
| Worldpay | £19 or £45 | 2.75% + 20p |
Is Taking Payments Over The Phone Safe?
Taking payments over the phone comes with inherent risks but, with the correct procedures in place, they can be as safe and secure as in-person transactions.
Above all, ensure your compliance with PCI regulations in order to protect your customers’ payment details and meet your legal obligations as a merchant that processes card payments.
This compliance is made easier by choosing a payment service provider that has compliance procedures and technology in place. But, that’s not all you can do to make over-the-phone payments safer.
Tips For Improving Phone Payment Safety
- Use a virtual terminal to take card payments over the phone.
- Always confirm consent before taking a payment over the phone.
- Confirm the payment amount with customers before requesting payment details.
- Type payment details directly into the payment terminal – don’t write them down anywhere.
- Never keep copies of customer payment details.
- Train your staff to ensure they know how to take payments securely over the phone.
- Create separate accounts for each staff member so transactions are assigned to individuals.
- Run regular malware checks on any devices used to accept payments.
- Keep all of your software up-to-date as most updates relate to improving security.
Top Benefits Of Taking Payments Over The Phone
Taking payments over the phone safely and securely requires some initial work but the benefits can be transformative for your business growth:
- The convenience of remote payments: By taking payments over the phone, you allow customers to pay remotely from any location.
- Instant purchases: No more waiting to make the sale.
- Payments up-front: For over the phone orders, you can encourage customers to pay for their goods/services up-front.
- Easy to set up: With the right virtual terminal, you can instantly set up a payment system that’s fully PCI-compliant.
- Scalability: By taking payments over the phone, you’re no longer limited to accepting payments in-person or limited by the number of card machines you have on the premises.
Essentially, it all comes down to getting paid faster by more customers and driving growth through increased revenue streams.
This is especially important for repeat purchases where payment delays can sour the relationship and prevent customers from buying as often as they could, which is bad for recurring revenue and productivity.
How We Can Help You With Taking Payments Over The Phone
Whether you’ve already got a payment service provider and you’re looking to set up a PCI-compliant system for taking payments over the phone or you’re starting out from scratch, we can help you find the right setup for your business.
We have relationships with top payment service providers and negotiate deals for businesses of all sizes to get the best deals.
Complete this short form and we can help you find the ideal payment processing partner (with virtual terminal functionality if required) and negotiate the best card processing rates for you.
