Accept Credit Cards Over the Phone—A Guide to Secure Phone Payments
How we handle payments has evolved rapidly in recent years, with more businesses seeking flexible and efficient options. One increasingly popular method is accepting credit cards over the phone. This approach provides convenience for customers and opens up new opportunities for businesses to operate beyond physical storefronts. But how does it work, and what are the benefits and risks involved? Let’s delve into the details to understand better how you can incorporate phone payments into your business operations.
What are Phone Payment Transactions?
Phone payment transactions, also known as card-not-present (CNP) transactions, are payments processed without the physical presence of a credit card. Instead of swiping or inserting a card, businesses take payment details over the phone and manually input them into a secure virtual terminal or payment system. This method is common among service providers, medical offices, remote sales teams, and even restaurants offering takeaway services.
Unlike in-person transactions, CNP payments pose unique challenges. Fraud risks are higher, and compliance with security regulations becomes crucial. Yet, their convenience makes them a valuable option for many businesses.
Benefits of Accepting Credit Cards Over the Phone
Taking credit card payments over the phone comes with a host of advantages. Let’s explore some of the key benefits.
Convenience
Phone payments make transactions easy for both businesses and customers. Customers can make payments from anywhere, eliminating the need to visit a physical location. This is especially beneficial for service-based industries where clients may need to be present at the point of sale. Convenience often leads to a more positive customer experience, which can translate into repeat business.
Faster Cash Flow
One major benefit of phone payments is the ability to receive funds quickly. Businesses can improve cash flow and maintain steady revenue by processing payments on the spot. This immediate access to funds is crucial for small businesses that rely on a consistent income stream to manage expenses and grow operations.
Expanded Market Reach
Phone payments allow businesses to expand their market reach significantly. No longer limited to local customers, companies can serve clients across the country or even internationally. This wider reach can lead to higher sales and increased brand exposure, opening doors to new opportunities.
Personalised Service
When taking payments over the phone, businesses can offer a personalised experience that’s often missing from online transactions. Customers can ask questions, receive product or service recommendations, and interact with real people. This level of service can build stronger customer relationships and enhance loyalty.
Challenges When Accepting Credit Cards Over the Phone
While there are many benefits, it’s important to acknowledge the risks and challenges associated with phone payments.
Higher Processing Fees
Card-not-present transactions typically incur higher processing fees than in-person payments. The increased risk of fraud leads payment processors to charge more for these services. Businesses need to factor these fees into their budget and pricing strategy to avoid cutting into profit margins.
Fraud Risk
Fraud is a significant concern when accepting payments over the phone. Without the cardholder present, verifying the transaction’s authenticity is harder. Fraudulent transactions can result in chargebacks and financial losses, making it essential to implement stringent security measures.
Data Security
Protecting sensitive cardholder information is a top priority. Businesses must ensure they handle data securely to avoid breaches and comply with regulations. Failing to protect customer information can lead to severe consequences, including legal action and damage to the company’s reputation.
Potential for Errors
Manually entering payment information increases the likelihood of errors. A simple mistake, such as inputting the wrong card number, can lead to failed transactions and customer dissatisfaction. Training staff to handle payments accurately and double-checking information can help mitigate this risk.
Steps to Securely Accept Credit Cards Over the Phone
A secure phone payment process is essential for protecting your business and customers. Here are the steps you should follow.
Set Up a Merchant Account
Before accepting credit card payments over the phone, you must set up a merchant account with a reliable payment processor. Research different providers and choose one that offers virtual terminal services, competitive fees, and robust security features. The application process may require information about your business, financial history, and estimated transaction volume.
Use a Virtual Terminal
A virtual terminal is a web-based platform that allows you to process payments by manually entering customer details. Once you’ve set up your merchant account, access the virtual terminal from any computer or mobile device. This tool provides a secure way to handle phone payments without additional hardware.
Collect Payment Details Securely
When taking payment information over the phone, collect only the necessary details. This typically includes:
- Cardholder name
- Credit card number
- Expiration date
- CVV (Card Verification Value)
- Billing address
Ensure you’re in a private and secure space when collecting this information to prevent eavesdropping or unauthorised access. Never record sensitive details in writing or store them improperly.
Process the Payment
Once you have all the required details, enter the information into the virtual terminal. Double-check for accuracy before completing the transaction. Processing the payment usually takes a few seconds, and you’ll receive confirmation once it’s successful.
Send a Receipt
After processing the payment, provide the customer with a receipt. Depending on their preference, this can be done via email or SMS. Sending a receipt confirms the transaction and serves as a record for both parties.
Keep Accurate Records
Maintaining detailed records of all transactions is crucial for accounting and resolving potential disputes. Keep a secure payment dates, amounts, and customer contact information log. This will help you track revenue and address any issues that may arise.
Safety Precautions and Legal Requirements
Securing customer data and complying with industry regulations are critical to accepting phone payments. Here’s what you need to know.
PCI DSS Compliance
The Payment Card Industry Data Security Standard (PCI DSS) outlines the requirements for securely handling credit card information. Compliance with these standards is mandatory for all businesses that process card payments. Failure to adhere to PCI DSS can result in fines and increased vulnerability to data breaches. Work with your payment processor to ensure your systems comply and review your security practices regularly.
Secure Communication
Always conduct phone transactions in a secure and private space. Avoid taking payments in public areas or on unsecured lines, as this increases the risk of data interception. Use encrypted communication channels to enhance security.
Employee Training
Proper employee training is essential to minimise the risk of errors and security breaches. Train your staff to securely collect and handle payment information, and emphasise the importance of not writing down or storing card details. Regular training sessions can keep everyone informed about the latest security threats and best practices.
Avoid Storing Sensitive Information
One of the most significant risks in phone payments is the potential for data storage errors. Never store sensitive information, such as credit card numbers or CVV codes, in your system unless necessary. If your business requires storage, ensure it’s done securely and complies with PCI DSS.
Cost Considerations
Managing the costs of accepting credit cards over the phone is vital to maintaining financial stability and efficiency.
Processing Fees
Card-not-present transactions often incur higher processing fees than in-person payments. These fees can vary depending on your payment processor, the type of card used, and the transaction volume. Consider negotiating rates with your provider or exploring options that offer competitive pricing.
Equipment Costs
While a virtual terminal doesn’t require physical equipment, some providers may charge for access to their platform or additional security features. When evaluating different payment processors, factor these costs into your budget.
Budgeting for Security Measures
Investing in security measures, such as encryption software and PCI compliance tools, is necessary to protect customer data. These costs can add up, but they’re essential for maintaining trust and avoiding costly data breaches.
Note: 70% of businesses experience higher phone payment fees than in-person transactions. Depending on the provider, processing fees can range from 2.5% to 3.5% per transaction. Additionally, equipment costs, like virtual terminal access fees, may add extra expenses. Budgeting for security measures, such as PCI compliance, is essential to safeguard against data breaches and avoid potential penalties.
Alternatives to Phone Payments
While phone payments are convenient, they may only suit some businesses. Here are some alternatives to consider.
Payment Links
Sending payment links via email or SMS is a secure way to collect customer payments. These links direct customers to a payment page where they can enter their card details securely. This method reduces the risk of data breaches and provides a more seamless experience for customers.
Mobile Payment Apps
Mobile payment apps allow businesses to process credit card transactions on the go. These apps are handy for service providers who travel to clients or operate without a physical location. They provide an extra convenience layer and often come with built-in security features.
Tips for Success
Follow these best practices to make the most of accepting credit card payments over the phone.
Clear Communication
When taking payments over the phone, speak clearly and explain the payment process to the customer. Ensure they understand the necessary information and confirm the details to avoid errors. A smooth and professional interaction can enhance customer satisfaction.
Verification Practices
To reduce the risk of fraud, implement verification practices such as asking for the billing address or using two-step authentication. These extra steps may take longer but can significantly improve security.
Regular System Updates
Keep your payment systems and virtual terminals updated to protect against security threats. Regular software updates ensure you use the latest technology and security patches. Work with your payment processor to stay informed about any necessary upgrades.
FAQs
How to take a credit card over the phone?
One of the most common ways to accept a credit card over the phone is to have the customer read their card number, expiration date, and CVV code. As they provide these details, you can input them into your POS system or virtual terminal. Double-check all the information to avoid errors that may result in a failed transaction. Make sure you’re in a secure environment to keep customer data protected. Once processed, confirm the payment and provide a receipt via email or SMS.
Can I give credit card details over the phone?
You should only share your credit card number over the phone if you made the call and trust the recipient. Scammers often impersonate legitimate companies to trick you into revealing sensitive details. If someone calls you and asks for your credit card information, it’s best to hang up and call the official number on their website. Always be cautious to prevent unauthorised charges or identity theft. Your security is your responsibility, so only give card details when necessary.
Is credit card over the phone safe?
Phone payments are generally safe, especially when credit card companies offer “zero liability” protection for fraudulent charges. However, you must follow best practices, such as using secure phone lines and only transacting with trusted businesses. Remember that the fraud risk is higher for card-not-present transactions, so extra vigilance is necessary. Businesses should also comply with PCI DSS standards to safeguard customer data. Ultimately, both parties should prioritise security for peace of mind.
Should I give a CVV number over the phone?
Providing your CVV number over the phone can be risky, as there’s no guarantee that the person you’re speaking with is who they claim to be. Even legitimate businesses may not have adequate security measures to prevent data theft. If you must give your CVV, make sure you trust the company and have initiated the call yourself. Be aware that scammers can misuse these details to make unauthorised purchases. It’s crucial to weigh the risks before sharing sensitive card information.
What card details should I give over the phone?
When paying over the phone, you may be asked for your full credit card number, the name as it appears on the card, the CVV or security code, and the card’s expiration date. Only provide this information if you trust the recipient and have verified their identity. Avoid sharing any additional details that are not necessary for the transaction. Being cautious with your card details can prevent fraud and ensure a secure transaction. Always keep an eye on your statements for any suspicious activity.
