Credit Card Payment by Phone: The Basics for Merchants


Credit Card Payment by Phone: The Basics for Merchants

Accepting credit card payments by phone (card-not-present payments, or CNP for short) opens up excellent commercial opportunities for merchants, allowing them to offer their customers another convenient way to pay. Not only can more payment methods help boost sales, but they can also enhance the customer experience. After all, 90 percent of customers think that merchants should offer a wide range of payment choices.

Over-the-phone payments are typically faster than bank transfers and enable quicker delivery of a purchased product. Although there are many reasons why customers might prefer to pay over the phone, it’s worth noting that this type of payment does carry an elevated risk of fraud due to the nature of being a CNP transaction (more on that in a bit). Thankfully, modern processes and technology enable merchants to take highly effective measures to protect themselves and their customers against CNP fraud, all while taking full advantage of the enormous potential that over-the-phone payments offer.

Accepting Payments Over the Phone

There are many scenarios in which credit card payments by phone are preferred over other methods, including bank transfer and online payment.

  1. If a customer calls to enquire about a product and decides to pay in the moment
  2. Some customers simply prefer to make payment with a person - to have some human contact - rather than via an electronic format
  3. Merchants can use CNP payments to take deposits as a means of protection on customer orders
  4. CNP transactions are useful for businesses that operate remotely, without a brick-and-mortar store
  5. In the case of technical or access problems that prevent customers from using other types of payment

Therefore, when merchants choose not to accept credit card payments by phone, they are blocking a portion of customers off from a preferred or alternative payment method. Naturally, this can hurt sales as well as customer satisfaction.

Including payments by phone is particularly beneficial for e-commerce retailers as another form of CNP payment. However, this doesn’t mean that brick-and-mortar merchants can’t benefit either. On the contrary, over-the-phone transactions enhance the range of payment options that physical stores can offer. For instance, many boutique clothing retailers tend to receive inquiries over the phone on certain products. As such, it makes sense commercially to close the sale there and then when the customer is on the phone. Accepting phone payments is also an excellent means of helping brick-and-mortar store merchants expand their offering online.

Is Card-Not-Present Payment Safe?

CNP transactions increase the risk that the person on the other end of the phone is a fraudster imitating the real cardholder. Typical security checks that merchants carry out in-store, like checking photo ID, are not possible with CNP transactions. However, merchants can offset the higher risk of card-not-present fraud by taking appropriate measures.

These include staff training to make sure that a robust security protocol is adhered to when accepting a credit card payment by phone and partnering with a payments processing provider with strong security credentials.

How can you accept payments over the phone?

Merchants can take a series of steps to securely accept credit card payments by phone.

  1. Gather the following information:
  • Full cardholder name
  • Long card number
  • Expiry date
  • CVV number (the 3 digits on the signature strip located on the back of the card)
  • Full billing address
  1. Send a physical copy of the purchase receipt to the billing address on file. You may also wish to send an electronic copy via email.
  2. For good book-keeping practice, save a copy of everything on file for a period of at least one year.

Ask for additional information

Any sort of inconsistencies in a transaction may indicate that fraud could be taking place. For instance, a different billing and shipping address should tell your employees to be extra vigilant. It is always a good rule of thumb to ask for as much information as possible, in addition to the mandatory credit card details to complete the transaction. This can include asking for date of birth, phone number, and an identification number from an official document such as a driving license or passport.

The importance of the right technology

The above best practices will help employees be fully up to speed with fraud prevention and detection, and help protect businesses in the event of fraudulent transactions or disputed payments later on. However, the right technology is critical for merchants to provide an appropriate level of security across their entire payment setup. This includes a fully secure point-of-sale system that is completely up-to-date and a payment gateway that offers highly secure data management features. In tandem, merchants can partner with a payment processing provider with a strong reputation for anti-fraud performance.

How much does it cost to process payment over the phone?

Payment processing fees vary based on the payment provider’s markup. There are credit card processing fees to consider, too. These include interchange, assessment, and risk and PCI compliance fees.

It is also important to note that because of the heightened risk of fraud with card-not-present transactions, processing fees tend to be higher than with card-present transactions. However, the commercial benefits of CNP transactions can be considerable in a variety of circumstances. For instance, these include the aforementioned scenarios of when a customer calls to enquire about a product and decides to make the purchase while on the phone, for customers who prefer to speak directly to a human rather than pay via an online payment interface, or for merchants to take a deposit as a means of protection on orders.

Accepting credit card payments by phone: getting it right

Accepting CNP payments by phone is an excellent option for merchants to add another channel to their payments ecosystem. Many customers prefer to pay this way and for many merchant types, phone payment makes business sense. It is also a wonderful means to help brick-and-mortar stores expand online. However, to take full advantage, merchants must implement a robust security setup as CNP transactions carry a higher fraud risk than card-present payments.

When partnering with a proven best-in-class payments processor and following a strict security protocol on phone credit card payments, merchants can successfully take effective security measures while enjoying the full benefits that CNP transactions provide.

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