The widespread use of credit cards and debit cards has made them an integral part of our daily lives. With fewer customers opting for cash payments, accepting credit cards has become imperative for most businesses. For entrepreneurs, partnering with a credit card processing company and setting up a card reader at the point of sale (POS) is considered a necessary expense. However, what options are available when a customer wishes to use their credit card outside of the traditional POS system?
Accepting credit card payments over the phone is a convenient and efficient way for businesses to facilitate transactions with their customers. By following a few essential steps, you can ensure a seamless payment process that instills trust and security. In this comprehensive guide, we will explore the key aspects of how to accept card payments over the phone, from preparation to execution, while prioritizing the security of sensitive customer data.
How to Take Credit Card Payments Over the Phone in 4 Steps
Determine What Credit Card Information Is Needed
Before accepting credit card payments over the phone, it is essential to determine the necessary credit card information. This includes the customer's card number, expiration date, cardholder's name, and CVV code. Clearly communicating these requirements to customers ensures a smooth and error-free transaction process.
The card number is a unique number that links the customer's account to the payment. Depending on the type of card, it has between 13 and 19 digits. The expiration date shows what month and year the card is still good until. It makes sure that the method of payment is up-to-date and can be used. The cardholder's name is important for identifying them and making sure the transaction is real.
Additionally, the CVV (Card Verification Value) code, also known as the security code, is a three or four-digit number found on the back of the card. It adds an extra layer of security by making sure that the card is in the hands of the cardholder during the transaction.
Take the Customer’s Order
Once you have established the required credit card information, proceed to take the customer's order. Whether it's a product or service, ensure clear and effective communication to accurately capture their requirements. Actively listen to the customer, repeat key details for confirmation, and address any questions or concerns they may have. This step contributes to customer satisfaction and ensures that the order aligns with their expectations.
Key-in the Customer’s Credit Card Information
To process mobile credit card payments, securely key-in the customer's credit card information into a reliable payment processing system or mobile point-of-sale (mPOS) app. Choose a payment gateway or mobile point-of-sale (mPOS) provider with a good reputation and strong encryption and security measures to protect sensitive card data. Be careful to enter the information correctly, as any mistakes could cause problems with or delays in payment.
During this step, it is very important to maintain a secure environment. Use a dedicated and protected internet connection, such as a secure Wi-Fi network or a cellular data connection. Avoid processing payments on public or unsecured networks to protect the security of your customers' information.
Send the Customer a Receipt
Once the mobile credit card payment has been successfully processed, promptly send the customer a receipt. This can be done by email, text message, or mobile app. The receipt serves as proof of purchase and provides transparency to customers. It should include detailed information such as the transaction amount, date and time, a unique transaction ID, and your business's contact information. Additionally, consider personalizing the receipt with your business logo and a thank-you message, further enhancing the customer's experience.
Benefits of Accepting Credit Cards Over the Phone
Accepting credit cards over the phone offers many benefits for businesses across various industries. By using this method of payment, businesses can make it easier for customers, speed up transactions, boost sales, and improve customer satisfaction overall.
Convenience for customers: Accepting credit cards over the phone eliminates the need for customers to physically visit a store or make cash payments. It provides a convenient option for those who prefer to complete purchases from the comfort of their own homes or while on the go. Customers can simply provide their credit card information verbally, eliminating the hassle of carrying physical cards or using other payment methods.
Expanded reach: Phone payments let businesses serve customers who can't come to the store because they live too far away, don't have enough time, or are worried about their health. This wider reach makes it possible to serve more customers and tap into new markets, which could lead to more sales and income.
Streamlined sales process: Accepting credit cards over the phone enables businesses to close sales swiftly. Businesses can speed up the payment process by getting rid of the need for customers to mail checks or give payment information through channels that aren't secure. This efficiency not only saves time but also reduces collection times, improving cash flow and overall operational efficiency.
Accepting credit cards over the phone offers numerous benefits for businesses. Businesses can use this payment method to improve customer satisfaction, increase sales, and make their sales processes more efficient. It also makes it easier for customers to pay and gives them a wider range of options. By embracing technology and implementing secure practices, businesses can unlock the advantages of accepting credit cards over the phone and stay competitive in today's digital landscape.
Challenges With Accepting Credit Cards Over the Phone
While accepting credit cards over the phone offers numerous benefits, it also presents challenges that businesses must address to ensure a smooth and secure transaction process.
Verification and authentication: Verifying the authenticity of the cardholder during a phone transaction can be challenging. Businesses can't look at the customer's card like they can when they do business in person. Instead, they have to rely on what the customer says. This opens the door to identity theft or fraud. These risks can be lessened by using more verification methods, like asking for proof of identity or using two-factor authentication.
Payment disputes and chargebacks: Payment disputes and chargebacks may be more likely to happen with phone transactions than with other payment methods. Customers can say that they didn't give permission for the transaction or that they don't like the quality of the goods or services they got. Businesses must keep detailed records of customer consent, transaction details, and order information so they can handle disputes and provide proof if needed.
While accepting credit cards over the phone offers convenience and flexibility, businesses must address challenges related to security, authentication, dispute resolution, compliance, and more. By implementing robust security measures, ensuring effective communication, and staying updated with compliance requirements, businesses can overcome these challenges and provide a secure and satisfactory payment experience for their customers.
How to Avoid Fraud and Chargebacks
Card-not-present transactions cost more to accept and come with a higher risk of fraud. If unauthorized payments go through, this could mean more chargebacks for your business. Here are some ways to cut down on fraud and chargebacks.
Save Transaction Records
Maintaining comprehensive transaction records is crucial to preventing fraud and chargebacks. By keeping detailed records of each transaction, businesses can show proof of customer consent, order details, and transaction information if a dispute arises. These records should include the date and time of the transaction, the customer's contact information, the items or services bought, the method of payment used, and any other relevant information.
Keeping records of transactions helps businesses not only settle disputes, but also track and analyze customer behavior, spot trends, and improve operational processes. Using a powerful customer relationship management (CRM) system or transaction management software can make it easier to keep records and find the information you need when you need it.
Set Up Delivery Confirmation
For businesses that sell physical goods, setting up delivery confirmation can significantly reduce the risk of fraudulent chargebacks. By using tracking numbers, requiring a signature upon delivery, or showing proof of shipment, businesses can prove beyond a doubt that the customer received the items they bought.
Delivery confirmation ensures transparency and accountability, making it more difficult for customers to falsely claim non-receipt of goods. It provides businesses with a reliable defense against chargebacks related to delivery disputes.
Additionally, businesses should make sure customers know what to expect from delivery, including estimated times and any special instructions. Customers will be more satisfied and trusting if they are kept up-to-date on the status of their shipment and given tracking information.
How Much Does It Cost to Accept Credit Cards Over the Phone?
Accepting credit cards over the phone incurs slightly higher costs compared to in-person transactions due to increased risk. Online or keyed-in transactions are considered riskier because it is harder to detect potential fraudulent activities. Card-not-present transactions, where the card is not physically present, are more susceptible to misuse of stolen credit card information. As a result, Visa and Mastercard charge higher interchange fees for keyed transactions, which are passed on to the business through their payment processor. Even flat-rate processors have higher rates for keyed transactions compared to card-present transactions.
However, using a virtual terminal as the primary payment method can result in cost savings in terms of purchasing and maintaining physical terminals. Virtual terminals offer a secure platform for accepting payments over the phone, reducing the need for physical infrastructure.
While accepting credit cards over the phone comes with increased costs due to risk factors, businesses can mitigate these expenses by leveraging virtual terminals as a cost-effective solution. It is important for businesses to carefully consider the risks and costs of phone transactions and choose the best payment processing method for their needs.