How Does Mail & Phone Order Credit Card Processing Works?

Credit cards are routinely processed for orders taken over the telephone.

Credit cards used for phone and mail orders are processed differently than when they are scanned at a retail location. Extra security is typically involved for orders where the physical credit card is not present.

Processing

Merchants that do a low volume of phone or mail orders can use their point of sale credit card terminal to enter credit card numbers. Larger merchants typically enter credit card information into computer software programs that act as virtual terminals and process credit card transactions in large quantities.

Security

When a merchant accepts a credit card without having the physical card present, extra steps are taken to ensure the card is being used by the actual cardholder. Merchants will check the billing address and zip code of the customer against the information on file with the credit card companies to ensure a match.

Cost Differences

It is more likely that a credit card transaction will be fraudulent when the actual credit card is not present. Merchants pay higher fees for transactions when credit card information is manually entered compared to transactions where credit cards are swiped due to the increased risk of fraud.

References

• Forbes: Saving on Credit Card Processing Fees
• Bank of America: How Merchants Process Credit Cards