In today's e-commerce and digital payments world, it's easy to overlook the importance of credit MOTO payments. MOTO, which stands for "mail order/telephone order," refers to any transaction where customers provide their credit card information remotely: over the phone, by mail, or via fax, rather than in-person or through an online checkout page.

While MOTO payments only make up a small percentage of overall transactions, they still have their place. For many businesses, especially MOTO merchants that cater to customers who may not be comfortable with or have access to online payment options, offering MOTO can be crucial for driving sales.

Be warned that MOTO payments come with their own unique challenges and risks. As card-not-present transactions, they have a much higher potential for fraud compared to in-person payments. And navigating the complexities of securely accepting, processing, and storing payment information provided remotely can be daunting for merchants.

In this comprehensive guide, we'll break down everything you as a business owner need to know about credit MOTO payments, including:

• What MOTO payments are, and how they differ from other transaction types
• The step-by-step process of accepting and processing a MOTO payment
• The key benefits and advantages of offering MOTO as a payment option
• The unique risks and challenges associated with MOTO and how to mitigate them
• Best practices and specific tactics for keeping your MOTO payment processing secure and compliant

Whether you're a small business just starting to accept remote payments or a larger merchant looking to optimize your MOTO processes, this guide will give you the knowledge and tools you need to confidently and securely offer this important payment option to your customers.

What Exactly Are Credit MOTO Payments?

With the rise of online marketplaces, card-not-present transactions are becoming increasingly popular. One of these CNP transaction types is MOTO, which stands for "mail order/telephone order." This refers to any transaction where the customer provides their credit or debit card information to the merchant remotely rather than in-person. This can include orders placed:

• Over the phone
• Through a mail order form
• Via fax

In a MOTO transaction, the merchant manually enters the customer's payment details into their virtual terminal or payment gateway, rather than the customer directly inputting their information through an online checkout page or in-person card reader.

This makes MOTO payments distinct from e-commerce transactions, where the customer submits their payment info through a website, and in-person transactions, where the physical card is used on a POS system. In both cases, the merchant doesn't need to manually input the card details.

Because the physical card is not present for the merchant to verify, MOTO payments are considered "card-not-present" transactions. This puts them in a higher risk category for fraud compared to in-person payments.

While any merchant can potentially accept MOTO payments, they are particularly common for:

• Businesses that process a high volume of phone orders, such as restaurants or catalog retailers
• Companies that receive order forms in the mail, such as magazine subscriptions
• Service-based businesses like contractors or utilities that set up recurring remote customer payments
• B2B businesses where orders and payments are often handled remotely

Essentially, any merchant that wants to provide a way for customers to pay without an online checkout system or physical card reader can benefit from setting up MOTO payment processing. However, along with that convenience factor comes additional responsibilities for securely handling sensitive payment data.

How Does Credit MOTO Payment Processing Actually Work?

At a high level, processing a MOTO payment follows the same general flow as other credit card transactions: the payment information is collected, the transaction is submitted for authorization, and if approved, the funds are transferred from the customer's account to the merchant account. The key difference is how payment information is initially collected and input into the system.

Here's a step-by-step breakdown of how a typical MOTO credit card processing works:

1. The customer provides their credit card details to the merchant remotely. This could be over the phone, on a physical order form sent through the mail, or via fax.
2. The merchant's representative manually enters that payment information into their virtual terminal, a web-based application for processing card-not-present transactions. Alternatively, some merchants may use a physical credit card terminal with a manual entry function.
3. That payment terminal is connected to a payment gateway, which securely transmits the transaction data between the merchant and the credit card networks for processing.
4. The payment processor then communicates with the customer's issuing bank through the credit card network to authorize the transaction. This involves checking that the card number is valid, sufficient funds are available, and there are no signs of fraud.
5. If the transaction is approved, the funds are transferred from the customer's account to the merchant's account, minus any processing fees. The merchant is notified of the successful payment, and the customer receives a receipt.

For card-on-file or recurring transactions, the process looks slightly different:

• Rather than collecting the card info each time, the merchant securely stores the customer's payment details in a vault - an encrypted database through their payment processor.
• The merchant then sets up a recurring billing schedule or initiates the transactions as needed, pulling the card info from that secure vault to process payments rather than collecting the info each time.
• To stay compliant, merchants must get the proper authorization from customers to store their info and communicate when and how much they will be charged on a recurring basis.

While the MOTO payment process may seem straightforward, a lot is happening behind the scenes to secure those transactions. Payment gateways use sophisticated encryption and tokenization to protect sensitive card data, and virtual terminals must adhere to strict PCI compliance standards.

By working with reputable payment processors and following best practices, merchants can ensure a smooth and secure MOTO transaction flow for their customers and their business.

The Key Benefits of Accepting MOTO Payments

While MOTO transactions may not be as common as in-person or online payments, they offer some distinct advantages for merchants and their customers. Here are some of the key benefits of accepting credit card payments via mail or phone:

• Expand payment options and reach more customers: Not every customer is comfortable paying online or able to pay in-person. By offering MOTO, merchants can cater to customers who prefer the simplicity and familiarity of placing an order over the phone or mailing in an order form with their payment info. This can be especially important for reaching certain demographics, like older customers.
• Provide convenience for service-based businesses: MOTO payments can be a game-changer for businesses that provide ongoing services billed regularly. Instead of chasing down payments each month, merchants can set up recurring billing by securely storing the customer's payment info on file. This saves time and ensures a steady cash flow.
• Enable remote payments for phone orders or field service: MOTO is a must for any business that takes orders over the phone, whether a delivery restaurant or a mail-order catalog. It's also vital for field service businesses like contractors or landscapers who need to collect payments on-site without a physical POS system.
• Potential cost savings: Maintaining a physical credit card terminal and POS system can be costly for some merchants, especially those with lower in-person transaction volume. MOTO payments can be processed with just a virtual terminal, which is typically less expensive than a full POS setup. This can help keep overhead costs down.

Ultimately, by saying "yes" to MOTO payments, merchants can expand their potential customer base, offer more flexible payment options, and potentially save on processing costs. While there are some additional security considerations to remember (which we'll cover later in this guide), the benefits of MOTO can be significant for many businesses.

The Risks and Challenges of MOTO Payments

While there are certainly benefits to accepting MOTO payments, these card-not-present transactions also come with some inherent risks and challenges that merchants need to be aware of:

• Greater risk of fraud: MOTO payments are more susceptible to fraud because the physical card is not present for the merchant to verify. Scammers may attempt to use stolen credit card numbers or engage in card testing to see if a card number is valid. Merchants bear more liability for fraudulent MOTO transactions.
• High likelihood of chargebacks and disputed transactions: The chargeback process allows cardholders to dispute a transaction and potentially reverse the payment. With MOTO payments, there's a higher risk of "friendly fraud," where a customer falsely claims they didn't authorize a purchase. Merchants must have clear documentation and evidence to fight these disputes.
• Storing payment data securely: To offer card-on-file or recurring billing via MOTO, merchants must securely store customers' sensitive payment data. This requires robust encryption, tokenization, and other security measures to prevent data breaches or leaks. The consequences of a breach can be severe.
• Maintaining PCI compliance: All businesses that accept credit card payments must comply with the Payment Card Industry Data Security Standards (PCI DSS). For MOTO payments, this includes additional requirements for securely handling payment info received over the phone or through mail. Staying compliant is an ongoing effort.
• Training staff on security protocols: With MOTO, staff members directly handle customers' payment data. They must be properly trained on how to securely receive, process, and store this info and identify potential fraud attempts. Even one untrained employee can put the whole system at risk.

While these risks and challenges can seem daunting, the good news is that merchants can use established best practices and tools to mitigate them. By implementing strong security measures and staying vigilant, merchants can safely offer MOTO payments while minimizing fraud and chargeback exposure.

Keeping Your MOTO Payments Secure: Best Practices and Tips

So, what can merchants do to ensure their MOTO payment processing is as secure and compliant as possible? Here are some essential best practices and tips to follow:

• Use a PCI-compliant virtual terminal and payment gateway: Your payment processing tools should fully comply with the latest PCI standards for securely handling and transmitting card data. Look for reputable providers that emphasize security.
• Require CVV and AVS on all MOTO transactions: The Card Verification Value (CVV) is the three or four-digit security code on the back of a credit card. Requiring customers to provide this helps validate that they have the physical card. Address Verification Service (AVS) checks that the billing address provided matches what the card issuer has on file.
• Implement additional fraud screening tools: Many payment gateways offer advanced fraud detection tools that analyze each transaction for potential red flags like unusual IP addresses, velocity limits, or mismatches in location data. Implementing these adds an extra layer of protection.
• Use 3D Secure for higher-risk transactions: For MOTO payments that are higher value or seem suspicious, consider using 3D Secure. This requires the cardholder to complete an additional authentication step with the card issuer, adding an extra level of fraud protection.
• Securely store and limit access to payment data: If you must store customers' payment data for recurring billing or card-on-file, use a secure vault with robust encryption and tokenization. Restrict access to this data to only those employees who absolutely need it, and never store CVV codes.
• Train your staff thoroughly: Ensure all employees handling MOTO payments receive thorough training on your security policies and protocols. This should include how to securely handle payment info, how to identify potential fraud attempts, and how to escalate suspicious activity. Provide ongoing training and reminders to keep security top of mind.
• Keep detailed records and documentation: Maintain clear, detailed records of all MOTO transactions, including the date, amount, authorization codes, and any customer communications. This will be essential if you need to fight a chargeback or dispute a fraudulent transaction.
• Monitor your transactions and reconcile regularly: Keep a close eye on your MOTO transaction activity, looking out for any unusual patterns or red flags. Reconcile your batches promptly and address any discrepancies quickly. The faster you catch potential fraud, the better.
• Partner with experts: Consider working with a payment processor specializing in card-not-present and MOTO transactions. These providers will have deep expertise in security best practices and can provide guidance and support to help you stay compliant and protected.

By following these best practices and staying vigilant, merchants can confidently offer MOTO payments without sacrificing security or peace of mind.

Maximizing MOTO: Give Your Customers Secure, Flexible Payment Options

At the end of the day, offering MOTO payment options is all about giving your customers the flexibility and convenience to pay in the best way for them. This type of reach is just one of the benefits of MOTO payments. Whether they prefer the simplicity of placing a phone order, the tradition of mailing in a payment form, or the ease of setting up recurring billing, MOTO allows you to say "yes" to more customers and sales.

However, with that flexibility comes the responsibility to ensure those payments are processed securely and in compliance with industry standards. One key step is partnering with the right payment processor, such as Zen Payments. By implementing the right tools, training, and best practices, you can protect your customers' sensitive data and your business from fraudulent activity and costly chargebacks.

The world of payments is constantly evolving, but one principle remains constant: customers want to pay in the way that is most convenient and secure for them. By embracing MOTO payments as part of your overall payment strategy, you can deliver on that expectation and create a seamless, trustworthy payment experience for your customers.

So don't let the risks of MOTO scare you away from this valuable payment channel. With the right knowledge, tools, and vigilance, you can maximize the benefits of MOTO while minimizing the challenges. Your customers—and your bottom line—will thank you.