Whether it is about chasing your payment through an invoice or requesting some deposit, ensuring payments over the phone (a type of CNP or Card Not Present transaction) will help in saving ample time. People will always be busy. However, it should not stop you from moving things faster -especially in terms of payments.
While the process is several yeas old, there is still some confusion around the concept of accepting credit cards on phone. Still, the concept of over-the-phone payments has immense potential for all types and scales of businesses.
What Do you Exactly Need?
To ensure the acceptance of credit card payments over the phone, you are expected to work with either a dedicated payments service provider or a merchant account provider. With the selected provider, you will able to execute phone-based payments by entering credit card-related information into a dedicated virtual terminal, a dedicated online software product that is usually provided by the payment service or merchant account provider. It will allow you to input as well as process the payment information of the customers when the card is not present. The POS or Point of Sale system might be able to operate in the form of a handle phone-centric and virtual terminal payments at the same time.
To ensure the acceptance of credit card payments over the phone, you will require access to either the payment service or merchant account provider. It will eventually offer you access to a dedicated POS or virtual terminal system that will deliver access to virtual terminal functionality while processing card-not-present transactions.
- Payment Service or Merchant Account Provider: With the help of a dedicated merchant account provider, you will receive access to a specialized merchant account for your business. It will also include software and hardware solutions that you will require for taking credit card payments. Most merchant account providers are capable of charging extensive fees while requiring a contract and an application, but are regarded as highly secure.
With dedicated payment service providers like Stripe or Square, you will not be receiving a specialized merchant account. The service will be transferring appropriate funds into the business-centric bank account. Payment service providers usually charge minimal fees while enabling you to receive services instantly after you sign up for the account online. However, customers can go ahead with facing issues by holding funds and closing or freezing accounts.
- Virtual Terminal: A virtual terminal is usually provided by the payments service or merchant account provider. It will enable you to key-in card-specific transactions while also including security measures along with the ability to transmit electronic receipts. In some cases, there is also the option of saving payment-specific information.
Some Point of Sale systems are capable of operating in the form of virtual terminals and processing card-not-present or CNP transactions. For instance, if you are using Square POS, you are able to leverage the Square POS application to charge a dedicated manual card entry. You can go ahead with typing in the card information of customers as they provide the same over phone and hit the button ‘charge.’
Understanding the Step-by-step Process
Once you will have dedicated access to a POS or virtual terminal system with the capabilities of card-not-present transactions, you can go ahead with accepting credit card payments on the phone.
- Determining the Requirement of Credit Card Information
Some POS systems and payment providers have specific requirements for obtaining information related to credit cards. Check the provider or contract website to observe what information you will require. Usually, you will be at least required to inquire customers about the following set of information to process the credit card with the help of the virtual terminal.
- Expiration date
- Credit card number
- Billing ZIP code
- Customer name
- CVV or security code
You might also be required to ask for the type of credit card (Visa, Mastercard, and so more) along with the phone number, email, and address of customers. If you will be shipping orders, you will require shipping information of customers. Moreover, if you will be sending text receipts or emails, you will require access to contact information.
- Taking the Order of the Customers and Inputting it in the System
When you have customers on the phone, you can go ahead with inputting their order-specific details into the respective system while calculating the total amount of the particular order. During this process, you are also expected to consider any shipping costs or sales taxes. Then, you can proceed with verbally communicating the final sales amount to the customers.
- Asking for Credit Card Information, Keying It Into the Virtual Terminal and Submitting the Payment
The virtual terminal unit should be able to notify in case the transaction has been approved. You have successfully accepted the payment. In case the transaction gets declined, you are expected to re-confirm the details with the customers or inquire in case they will use another card.
- Sending Customers a Proper Receipt and Completing the Order
Based on the existing system, you can think of sending a text receipt or email or even printing one to mail to the end customers. You can also think of saving a receipt along with additional information according to your records. As CNP or Card-not-present transactions impose more risk, you can think of specific notes with respect to the sale and the phone call with the customer.
How to Minimize Fraud and Chargebacks?
In addition to being more expensive towards accepting, CNP or Card-not-present transactions are available with a higher risk of chargebacks and frauds. It could potentially imply more chargebacks for the business in case unauthorized payments will pass. Here are some ways in which you can limit chargebacks and frauds:
- Saving Transaction Records and Taking Notes: As phone-based payments tend to be riskier in comparison to in-person payments, you might think of taking more detailed notes -including the time, date, and name of the customers and any other information you would find relevant. With respect to a chargeback, you can leverage the available information in case of counter-dispute.
- Setting Up a Delivery Confirmation: In case you are shipping orders to customers who are paying on the phone, it is useful to purchase insurance or tracking for the shipment -particularly if it is an expensive purchase. This can add the overall protection in case of a lost shipment or chargeback claim. You can also think of requiring a signature from the customers upon receiving the shipment or requiring the shipping service to offer you with relevant proof of delivery.
Most virtual terminals are available with an address verification system towards cross-checking the billing address of the customers with the file’s address at the respective credit card company.
Is It Safe to Take Credit Card Payments on the Phone?
Yes, it is completely safe when you will follow the right process. When you are a business owner, some of the biggest risks linked with phone-based payment processing arrive from not following proper PCI DSS compliance. This refers to the overall consent to securely and safely accepting, storing, processing, and transmitting cardholder-specific data with respect to card transactions.
Non-compliance will result into proper fines for your business. Therefore, it is always worthy to ensure that you are executing things properly. What is the easy solution? It is recommended to select a reliable payment provider, in association with the virtual terminal provider, capable of completing the compliance legal work for your business.
What Will It Cost to Accept Credit Cards on the Phone?
The exact cost of accepting credit card payments on the phone will depend on the credit card processor along with the respective pricing model. Usually, the acceptance of credit cards on the phone will eventually cost you significantly more than the acceptance of physical card with a dedicated credit card reader.
Most credit card processors are known to charge around 2-4 percent of the particular transaction. In case of CNP or Card Not Present Transactions, the number will be likely to be on the higher spectrum. It is because of the higher risks of the acceptance of payments without the need of a physical credit card. Additionally, it is quite common for credit card processors to ensure a per-transaction fee to the respective percentage rate for ensuring high-risk transactions like payments done over the phone.