How to Accept Credit Card Payments Over the Phone

How to accept credit card payments over the phone

You can accept card payments over the phone in several ways: 

• Key in card numbers on your credit card terminal: One of the most straightforward ways to accept a credit card over the phone is to ask your customer to read off the card number, expiration date and Card Verification Value (CVV) code while you type the information into the credit card terminal of your POS system. Importantly, instruct employees never to write down cardholder information ― a practice that can put your business at risk for violating credit card processing rules and laws, including Payment Card Industry (PCI) data security standards.
• Key in card numbers on your mobile credit card processing application: You may want to accept credit card payments with your phone instead of a terminal. To do so, just enter your customer’s credit card information into the mobile app your credit card processor provides. (The best mobile credit card processors help you accept all major credit cards, provide free payment apps, sell reasonably priced EMV card readers and provide generous customer support.) 
• Key in card information using a virtual terminal: Virtual terminals are essentially web-based credit card processing applications. They sometimes offer Level 2 or Level 3 processing ― methods that capture additional data to verify a transaction’s authenticity. This functionality typically incurs an additional monthly charge, making it a viable option only for businesses that accept high-dollar transactions or experience a high volume of phone transactions. 

Types of businesses that accept credit card payments over the phone

Accepting credit cards over the phone is expected in some industries. For example, if you have a service that delivers or provides curbside pickup, customers expect to be able to order and pay by phone. Additionally, some businesses accept phone payments to boost customer convenience. 

Here are a few business types that frequently accept credit card payments over the phone: 

• Restaurants
• Retailers offering curbside pickup and delivery options
• Professional firms like doctor’s offices
• Freelancers and consultants
• Home services companies
• Construction and renovation contractors

How do merchants ensure security with phone payments? 

When a customer pays with a credit or debit card over the phone, there’s always a risk that the customer isn’t the authorized card user. In addition to incurring higher processing rates, these transactions leave merchants vulnerable to fraudulent charges. 

To avoid fraudulent charges, merchants should take the following security measures: 

• Require complete information: When accepting a credit card over the phone, key in the complete information, including the card number, expiration date, CVV code and the customer’s full name as it appears on the card. Request the customer’s phone number and complete billing and shipping addresses, including ZIP codes.
• Use a secure POS system: The best POS systems reduce the chance of fraud with technology that verifies customer accounts and secures transactions. For example, Clover POS provides end-to-end encryption to ensure secure and PCI-compliant transactions. (Read our Clover POS review for more information about its POS security features.)
• Confirm delivery of products: Always confirm product delivery with customers who pay over the phone via credit card. A clear payment and delivery record can help you confirm the transaction is legitimate.
• Match the customer’s ZIP code: If the billing and shipping address ZIP codes don’t match, ask the customer why. If the answer doesn’t sound reasonable, ask for another payment method or require the goods to be delivered to the billing address. 

Benefits of accepting credit cards over the phone

Accepting credit cards over the phone can bring a host of benefits to your business, including the following: 

• Accepting credit cards over the phone is convenient for customers: Customer convenience is a significant concern for merchants. Accommodating customer payment preferences ― including phone payments ― boosts satisfaction and fosters repeat business.
• Accepting credit cards over the phone helps you recapture lost sales: If a customer couldn’t buy something in-store because it was out of stock or your website payment page isn’t working, you can recapture these lost sales by providing a phone number for orders.
• Accepting credit cards over the phone speeds up payment: For businesses that invoice customers, offering the option to pay over the phone can help you collect accounts payable sooner and reduce collection costs.
• Accepting credit cards over the phone enables virtual business: Businesses that take payments remotely, either by phone or online, may not even need a physical retail or office space.

Drawbacks of accepting credit cards over the phone

Phone payments aren’t without their concerns. Be aware of the following drawbacks of accepting credit cards over the phone: 

• Accepting credit cards over the phone increases fraud risk: Merchants must mitigate fraud risk by implementing robust security practices when taking phone payments. For example, gather complete information, invest in a highly secure POS system and credit card reader and always confirm the receipt of goods with the customer to establish a paper trail.
• Accepting credit cards over the phone boosts employee fraud risk: Employee fraud is an unfortunate risk merchants must consider. An untrustworthy employee might use or sell the credit card information they gather. To ensure PCI compliance and mitigate this risk, ensure there’s no written record of customer card information. Instead, have associates enter the data immediately into the POS system, where it will be encrypted for safety.
• Accepting credit cards over the phone incurs higher credit card processing fees: Processors charge more for card-not-present transactions due to the higher risk of fraud. 

What does it cost to accept credit cards over the phone?

Credit card processing costs differ widely by service provider and pricing model. However, you’ll likely pay more to accept credit cards over the phone than in-person, card-present transactions. 

Most credit card processors charge merchants 2 percent to 4 percent of any given transaction. Card-not-present transactions like phone orders will likely incur costs on the higher end of that spectrum due to the increased risk involved. Additionally, credit card processors will typically add a per-transaction fee to the percentage rate for such higher-risk transactions.

Best credit card processors for accepting payments over the phone 

Many of the best credit card processors provide virtual terminals to support phone payments. Here’s an overview of their credit card processing fees:  

Jennifer Dublino contributed to this article.