FinancesHow to Take Card Payment Over the Phone for a Small Business

How to Take Card Payment Over the Phone for a Small Business

Allowing your customers to pay for products and services using a credit card is a great way to improve the customer experience and even improve your business’ cashflow. You might already have an e-commerce website setup to allow customers to pay online, but for many businesses customers call in by phone to enquire about a product, then order it and expect to pay over the phone by credit card. In this article, I explain the basics of setting up a card payment system to allow you to accept credit card payments over the phone.

How to accept card payments over the phone

Connect with a payment service provider who can provide you with access to a virtual or POS terminal. This terminal must have the virtual terminal capability. Moreover, it should handle card-not-present payments. Both of these are necessary to take card payments over the phone.

  1. Merchant Account or Payment Service Provider

A specialised merchant account for your company is necessary to accept card payments over the phone. Although they might charge high fees and need registration, merchant account providers are considered safer.

You don’t get a particular merchant account from payment service providers like Square or Stripe. Instead, the service transfers the necessary amounts to your company’s bank account

After registering an account, payment service providers usually don’t charge huge fees and let you start using their services immediately. However, some customers have complained about keeping their money or having their accounts frozen or closed.

  1. Virtual Terminal

A virtual terminal lets you input card payments and is offered by your payment services provider. It usually comes with security features, the flexibility to generate digital receipts, and the opportunity to store payment information.

Specific point-of-sale systems may function as virtual terminals and handle card-not-present payments.

For instance, if you employ Square POS, you may charge a “manual card input” using the Square POS software. When a consumer gives you credit card details over the phone, you may fill it in and click “charge.”

Step-By-Step Process

You can take payments by credit card over the phone using a virtual terminal or POS system with card-not-present functionality. Here is a step-by-step guide that can help you with how to take over-the-phone payments.

  1. See What Card Details Are Needed for a Transaction

Various POS systems and payment processors have multiple variations for credit card data. See your agreement or the service provider’s website for further details on this.

To accept a customer’s credit card using your virtual terminal, you must, in most cases, ask for these details:

  • The number on the card front
  • Date of expiration
  • The CVV 
  • Client’s name
  • Payment ZIP code

You should also collect the client’s email, mobile number, and the sort of card they are using. In addition, you’ll need the customer’s shipping information if you want to send any products their way.

  1. Receive Customer’s Order 

To accept card payments on the phone, enter the specifics of their purchase into your system and determine the order’s subtotal. 

Moreover, take into account any applicable sales taxes and shipping charges. Then, directly inform your consumer of the total sales amount.

  1. Ask for Their Card Details for the Virtual Terminal

Your virtual terminal will inform you if the payment has been authorised and you have safely received the money. If the price is rejected, ask your customer to check the information once more. If the issue prevails, ask them to use a different card.

  1. Hand Over the Receipt to the Customer

Based on your platform, you can generate a receipt to send to the customer by email or SMS. 

You should also keep a receipt and other related details for your files. You may take detailed notes on the sales and your phone chat with the customer because payments over the phone are quite risky.

Advantages of accepting payments over the phone

Using a specialised mobile app to take card payments may substantially increase business productivity and simplify sales. 

First, a mobile payment system sometimes needs an app and is more practical and beneficial for businesses than other standard solutions. 

Without the need for a conventional, expensive payment system, a retailer may now manage and execute card transactions by merely entering the customer’s card details. 

Mobile payment methods not only boost sales but also reduce operational expenses. Plus, it ensures a frictionless payment experience for your customers. It also boosts consumer engagement. 

This offers you a strategic advantage and places you in a superior position to draw in the intended audience and boost conversions.

Mobile payments give the required protection to guarantee your small company stays secure from attacks. However, using out-of-date payment methods may increase the chances of cyber attacks and fraud.

Mobile payments outperform other popular payment methods in terms of protection. Thanks to the developers who frequently release new fraud-prevention solutions to support retailers.

Digital payment systems are simple to connect with your small company, and you can access various third-party plug-ins to carry out seamless transactions.

Disadvantages of payments by phone

The modern consumer rarely uses cash and expects to complete a purchase from the convenience of their home, especially for firms that rely on deliveries. Moreover, the debit card payment processing time is somewhat less.

That indicates that companies are required to take payments over the phone, even though doing so results in higher fees from credit card processors.

Although companies benefit from allowing customers to make phone payments using cards, the chances of fraud are high. 

When taking credit cards over the phone, you must implement the finest procedures and regulations to prevent unintentional fraud.

Always record the full name and contact information of the client, get a credit or debit card reader and POS system that are highly secure, and verify the receipt of the items with the client to create a paper trail. All of this can be a lot of hassle.

How to minimise risks

Card-not-present transactions are not only more costly to handle, but they also carry a larger risk of fraud. Some of these risks include chargebacks for your company in case of illegal payments.

But don’t worry; here are some tips for reducing chargebacks and fraud.

  • Never Delete Transaction Records

You must maintain thorough notes of every transaction. This may include the client’s name, transaction date and time, order details, and any other essential information. You can utilise those details in a counter-dispute in case of refunds or false claims.

  • Set up a Delivery Confirmation

A strict parcel monitoring system can help you prevent fraud in the case of delivery services. This is especially important for pricey phone payments.

In the event of a reversal or lost cargo claim, this may provide further protection. You also might demand a customer’s signature upon receipt of the package or ask your shipping provider to give you evidence of delivery.

The payment address of a consumer is compared with the address mentioned by their credit card provider via email. The email validation feature is common in virtual terminals. Thus, you don’t have to worry about accessing it.

How much will it cost you to setup?

The cost of taking card payments over the phone depends on your credit card operator and price model. Broadly speaking, using a credit card reader to take an actual card is more expensive than taking credit cards over the phone.

Many credit card issuers enjoy fees between 2% and 4% of each transaction. Due to the heightened risk of taking payment when a physical credit card is unavailable, that percentage is probably greater for these transactions. 

When processing phone payments and other high-risk transactions, credit card companies often add a per-transaction fee on top of the standard interest rate.

Processing time

Credit card payments can take almost 48 hours to process. A digital receipt is available right away, but the payment will take almost 48 hours to reach your account.

Taking card payments with PayPal

Many businesses now have the ability to accept credit cards payment online and in-store, thanks to PayPal. You can utilise PayPal’s virtual terminal on a computer or a smartphone if you have internet connectivity. 

Start the PayPal virtual terminal when a client phones to make an order, and enter the customer’s card details, billing address, and shipping information. 

Once you’ve entered all the details, you may finish the transaction and generate the packing slip and mailing label.


Many consumers prefer the extra convenience of paying their bills over the phone rather than posting out cheques or using a card machine so you should really setup your business to allow users to make payments over the phone.

If you run a delivery-based service, you should be aware that clients frequently anticipate placing an order from the comfort of their own homes.

We hope this detailed guide has cleared all your questions about how to accept a credit card payment over the phone.

Written by

Mark Hodgson
Mark Hodgson
Mark Hodgson is one of our expert writers. Mark is our lead researcher and editor who writes our main guides and expert topic coverage. He’s passionate about helping entrepreneurs, startups and small businesses with practical advice delivered clearly. Mark’s worked for a number of business magazines and titles and has started two small businesses himself, so has first-hand experience in setting up, managing and growing a small business and shares his expertise with our readers.

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