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How to Accept Credit Card Payments Over the Phone

Adam Uzialko
Adam Uzialko
business.com Staff
Updated Jun 29, 2022

Take card payments securely over the phone to increase your customers' convenience.

Credit cards and debit cards have become ubiquitous. Almost everyone carries them, and fewer customers are paying cash than ever. For most businesses, accepting credit cards is imperative. Partnering with a credit card processor and setting up a card reader at the point of sale (POS) is often just another cost of doing business for entrepreneurs. But what happens when a customer wants to use their credit card outside the POS?

Many businesses, from restaurants to retailers, take orders over the phone. It’s generally thought of as an added service to boost customer satisfaction in an increasingly card-centric society. Accepting credit cards over the phone can also help businesses close sales quickly and reduce collection times. 

Editor’s note: Looking for a credit card processor for your business? Fill out the below questionnaire to have our vendor partners contact you with free information.

Here are some types of businesses that are increasingly taking credit card payments over the phone: 

  • Restaurants
  • Retailers offering curbside pickup and delivery options
  • Professional firms such as doctor’s offices
  • Freelancers and consultants
  • Home services companies
  • Construction and renovation contractors

If you’ve ever wondered how to accept credit card payments over the phone, this guide can help. We’ll also walk you through the pros and cons of accepting credit cards over the phone and how you can best ensure your customers’ data remains safe.

How to accept credit card payments over the phone

Accepting credit cards over the phone is an important way to boost customer satisfaction. It offers your customers another way to pay that might be more convenient for them, helping you drive sales. Luckily, there are several methods for accepting a customer’s credit card over the phone.

  • Keying in card numbers on your credit card terminal: One of the most straightforward ways to accept a credit card over the phone is to ask your customer to read off the card number, expiration date and CSV code while you type the information into your credit card terminal at the POS.

  • Keying in card numbers on your mobile credit card processing application: Alternatively, if you use your phone and a mobile app to accept credit cards instead of a terminal, you can enter a customer’s credit card information into the mobile app your credit card processor provides.

  • Keying in card information using a virtual terminal: Key in a customer’s card with a virtual terminal, which is essentially a web-based credit card processing application. Virtual terminals sometimes allow you to reduce credit card processing costs over the phone with what’s known as Level 2 or Level 3 processing. By capturing additional information that helps verify the transaction’s authenticity, Level 2 and Level 3 processing reduces the rate the processor charges you for phone transactions. However, this type of deal typically comes with an additional monthly charge, so it’s likely useful only for businesses that accept high-dollar transactions or experience a great deal of purchasing volume over the phone.

It’s important to note that accepting credit cards over the phone is less secure than accepting a card physically at the POS. To account for this higher fraud risk, credit card processors generally charge higher rates and per-transaction fees for card-not-present transactions, including keying in card information over the phone.

Did you know?Did you know? When you or your employees accept orders over the phone, it’s crucial not to write down any cardholder information, as this puts you at risk for PCI noncompliance.

What does it cost to accept credit cards over the phone?

Exactly what accepting cards over the phone will cost depends on your credit card processor and pricing model. Generally, though, accepting credit cards over the phone will cost you more than accepting a physical card with a credit card reader.

Most credit card processors charge 2% to 4% of a given transaction. For card-not-present transactions, that number is likely to be on the higher end because of the increased risk of accepting payment without a physical credit card. In addition, it’s common for credit card processors to tack on a per-transaction fee to the percentage rate for higher-risk transactions such as payments over the phone.

TipTip: For a breakdown of the standard pricing models and how the rates apply to card-not-present transactions, see our recommendations for the best credit card processors.

Is it safe to pay over the phone with a credit card?

When a customer pays with a credit or debit card over the phone, there’s always a risk that the customer is not the authorized card user. This risk leads credit card processors to hike rates on card-not-present transactions, including keyed-in card numbers accepted over the phone. To avoid fraudulent charges, you should take several extra steps to secure transactions over the phone:

  • Require complete information. When accepting a credit card over the phone, you should always key in the complete information: card number, expiration date, CSV code and the customer’s full name as it appears on the card. You should also request the customer’s complete billing and shipping addresses – including ZIP codes – and phone number.

  • Use a secure POS system. The best POS systems are secure and reduce the chance of fraud. Leading POS systems often include technology capable of verifying a customer’s account. Check out our review of Clover’s POS system to learn more about POS security features. 

  • Confirm delivery of products. You should always confirm the delivery of any products shipped to a customer who paid with a credit card over the phone. Establishing a clear record of payment and delivery can help you confirm that the transaction was legitimate.

  • Match the customer’s ZIP code. If the billing and shipping address ZIP codes don’t match, ask the customer why. If the answer doesn’t sound reasonable, ask for another payment method or require the goods to be delivered to the billing address. 

While accepting credit cards over the phone is often convenient and sometimes necessary to keep customers happy, it does come with added risks. Still, if you take the proper steps, accepting payment by card over the phone can benefit your business. Just be sure to follow best practices at all times to avoid being the victim of fraudulent transactions.

FYIFYI: If you’ve received fraudulent phone payments before, you should keep a list of the delivery addresses associated with disputes and chargebacks. Check the addresses for incoming orders against your list to avoid fraud.

Can I take a credit card payment over the phone with PayPal?

Many businesses already accept credit cards through PayPal online and in-store. To accept credit card payments over the phone using PayPal, you’ll need to pay for a virtual terminal in addition to PayPal’s credit card fees

You can use PayPal’s virtual terminal on a mobile device or desktop as long as you maintain internet access. When a customer calls in to place an order, launch the virtual terminal on PayPal and key in the customer’s credit card information, billing address and shipping address. Once you’ve filled out all the customer’s information, you can complete the transaction and print a receipt, packing slip and shipping label.

PayPal’s virtual terminal costs $30 per month, with a transaction rate of 3.09% plus 49 cents per transaction for payments in U.S. dollars. The virtual terminal subscription includes PayPal Payments Pro, which essentially allows you to turn your website into an e-commerce site, including shopping cart integrations. Online transactions through PayPal Payments Pro cost 2.89% plus 49 cents.

Can I use Square for over-the-phone credit card processing?

When using Square, you have the option to manually key in a customer’s credit card information over the phone. First, download the Square Point of Sale app on an Android or iOS mobile device. When signing up, you can also elect to have a free magstripe card reader mailed to you, or you can purchase an EMV-compliant card reader.

Once your account is active, set up inventory and adjust pricing and tax settings accordingly, or manually enter the price of an item when a customer is ready to make a purchase. You can accept credit cards over the phone by keying in the customer’s card number, expiration date and CSV code. 

Manually keying in customers’ credit cards is significantly more expensive with Square, however. Swiped cards start at a flat rate of 2.6% plus 10 cents, while keyed-in cards cost 3.5% plus 15 cents per transaction. Read our in-depth review of Square’s credit card processing service for more information.

TipTip: In addition to PayPal and Square, other virtual terminals will help you accept credit card payments over the phone. Learn more about top options in our review of Payline, our Payment Depot review and our Shopify Payments review.

Drawbacks of accepting credit cards over the phone

In many cases, small businesses have no choice but to accept at least some credit cards over the phone. The modern customer seldom carries cash and, especially for delivery-based businesses, often expects to complete an order from the comfort of their own home. That means businesses are expected to accept payment over the phone, even if credit card processors charge more for them to do so.

Offering your customers the option to pay by card over the phone is good for business, but it also carries a significant risk of fraud. Implementing best practices and policies to ensure your business doesn’t unknowingly engage in fraudulent transactions is an absolute must when you begin accepting cards over the phone. Always take down the customer’s complete information, invest in a highly secure POS system and credit card reader, and always confirm the receipt of goods with the customer to establish a paper trail.

In many cases, small business owners are caught between customer demand and secure payment methods. In a perfect world, every transaction would be airtight. Unfortunately, customers expect your business to support their preferred payment method. To do so the right way, take the appropriate precautions and ensure your staff always adheres to the policies you’ve established.

Top credit card processing virtual terminals for phone payments

Here’s a look at some top credit card processing virtual terminals for phone payments and their rates. 

ProcessorTransaction rateMonthly charge
Square3.5% + $0.15$0
PayPal3.09% + $0.49$30
Payline DataGeneral: Interchange + 0.4% + $0.20
Medical: Interchange + 0.2% + $0.10
Nonprofit/educational: Interchange + 0.1% + $0.10
$20, plus $10 for virtual terminal
Payment DepotStarter plan: $0.15
Most popular plan: $0.10
$29-$199 with virtual terminal included
ShopifyVaries: 2.9% + $0.30 to 2.4% + $0.30$29-$299 with virtual terminal included

Jennifer Dublino contributed to the writing and research in this article.

Image Credit:

GlobalStock / Getty Images

Adam Uzialko
Adam Uzialko
business.com Staff
Adam Uzialko is a writer and editor at business.com and Business News Daily. He has 7 years of professional experience with a focus on small businesses and startups. He has covered topics including digital marketing, SEO, business communications, and public policy. He has also written about emerging technologies and their intersection with business, including artificial intelligence, the Internet of Things, and blockchain.