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How to Accept Credit Card Payments Over the Phone

Adam Uzialko
Adam Uzialko

Learn how to accept credit card payments by phone.

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 is often just another cost of doing business for entrepreneurs. But what happens when a customer wants to use their credit card outside the point of sale?

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. If you've ever wondered how to accept credit card payments over the phone, this guide can help. We will 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.


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How to accept credit card payments over the phone

Accepting credit cards over the phone is often important to boosting customer satisfaction. It offers your customers another way to pay that might be more convenient to them, helping you to 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 simply 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 point of sale.
  • 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 provided by your credit card processor.
  • Keying in card information using a virtual terminal: Finally, you can 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 bring down your costs of accepting credit cards over the phone with what is known as Level 2 or Level 3 processing. By capturing additional information that helps verify the authenticity of the transaction, Level 2 and Level 3 processing reduce the rate the processor charges you for phone transactions. However, this type of deal typically comes with an additional monthly charge, so it is likely only useful 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 point of sale. To account for this higher risk of fraud, credit card processors generally charge higher rates and per-transaction fees for card-not-present transactions, including keying in card information over the phone.

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

Exactly what accepting cards over the phone will cost you depends on your credit card processor and the pricing model you select. For a breakdown of the common pricing models and how the rates apply to card-not-present transactions, see our best picks page for credit card processors. Generally, though, accepting credit cards over the phone is going to 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. With card-not-present transactions, that number is likely to be on the high end because of the increased risk of accepting a payment without a physical credit card. In addition, it is common for credit card processors to tack on a per-transaction fee to the percentage rate for higher-risk transactions like payments over the phone.

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 is always the risk that the customer is not the authorized card user. It's this risk that 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 point-of-sale system. A secure POS system could reduce the chance of fraud. Leading POS systems often include technology capable of verifying a customer's account. [See our review of Clover's POS system and credit card processing services.]
  • Confirm delivery of products. You should always confirm the delivery of any products that are 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.

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

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

To accept credit card payments over the phone using PayPal, you will need a virtual terminal. PayPal's virtual terminal can be used on a mobile device or desktop, so long as you maintain internet access. When a customer calls in to place an order, you simply 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 or shipping label.

PayPal's virtual terminal costs $30 per month, with a transaction rate of 3.1% plus 30 cents per transaction. 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 2.9% plus 30 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 purchase an EMV-compliant card reader.

Once your account is active, you can set up inventory and adjust pricing and tax settings accordingly, or you can 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 simply 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.

Accepting credit cards over the phone has its pros and cons

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, whether credit card processors charge more for the pleasure or not.

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 in 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.

Image Credit: GlobalStock / Getty Images
Adam Uzialko
Adam Uzialko Staff
Adam Uzialko is a writer and editor at 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.