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What is a MOTO Merchant Account?
MOTO (Mail Order/Telephone Order) Payment Processing, also known as a MOTO Merchant Account, is a specialized payment processing solution designed for businesses that accept orders remotely. This method is crucial for companies that operate without a physical point of sale, such as those taking orders over the phone or through mail. By allowing customers to provide their payment information without being physically present, MOTO Payment Processing offers businesses the flexibility to process transactions efficiently, regardless of where their customers are located. This makes it an ideal solution for businesses like catalog retailers, call centers, subscription services, and any company that relies heavily on remote transactions.
Mail Order Payment Processing & Telephone Order Payment Processing
MOTO Payment Processing includes both Mail Order Payment Processing and Phone Order Payment Processing. In these scenarios, the merchant manually enters the customer’s payment details—such as credit card number, expiration date, CVV code, and billing address—into a virtual terminal or payment gateway. Since these transactions are classified as “card-not-present,” they inherently carry a higher risk of fraud. As a result, MOTO Merchant Accounts often come with enhanced security measures like the Address Verification System (AVS) and CVV checks to help verify that the transaction is legitimate. Additionally, because of the increased risk, processing fees for MOTO transactions are typically higher than those for in-person card-present transactions. To protect both the business and the customer, merchants using MOTO Payment Processing must adhere to strict PCI-DSS (Payment Card Industry Data Security Standard) compliance requirements, ensuring that all payment data is securely handled and stored to prevent data breaches.
Are MOTO Merchant Accounts Still Relavent?
As online shopping continues to grow and evolve, the way people make purchases has diversified significantly. From ordering groceries online to booking last-minute travel arrangements, eCommerce has become an integral part of everyday life. However, this shift toward digital transactions doesn’t mean that traditional MOTO (Mail Order/Telephone Order) payment processing is becoming obsolete. On the contrary, MOTO remains a crucial option for many customers and businesses alike.
Several factors contribute to the enduring relevance of MOTO Payment Processing. For some customers, particularly older generations, there may be a preference for placing orders by phone or mail, as they might not feel as comfortable navigating online payment portals. Additionally, even tech-savvy consumers may have concerns about data security and prefer to provide their payment details directly over the phone to a trusted representative. Furthermore, there are instances where customers have specific questions or require personalized assistance that only a live conversation can provide, making phone orders the preferred method of completing a purchase.
While MOTO credit card processing continues to play an important role across various industries, it’s also true that securing a MOTO Merchant Account can be challenging for small business owners and entrepreneurs. Finding a payment processor that offers favorable rates and is willing to approve a MOTO account can be difficult, but the need for this service persists, reflecting the diverse ways in which consumers choose to engage with businesses in the digital age.
Why are MOTO merchant accounts considered high risk?
A MOTO Merchant Account is considered high risk because it involves processing payments when the customer and their credit card are not physically present with the merchant. These “Card Not Present” (CNP) transactions are inherently riskier than in-person transactions where a customer swipes or inserts their card at a physical location. The increased risk is largely due to the potential for fraud—without the physical card and the customer’s presence, it’s easier for unauthorized users to provide stolen credit card information. Additionally, these types of transactions have a higher likelihood of chargebacks. This can occur when customers experience buyer’s remorse, misunderstand the transaction, or claim they didn’t authorize the payment.
Payment processors bear the brunt of this risk. If a charge is disputed and the merchant doesn’t have sufficient funds to cover the chargeback, the payment processor must refund the customer out of its own pocket. Given these risks, payment processors often impose higher fees, stricter terms, and more rigorous vetting processes for MOTO Merchant Accounts. The increased scrutiny and costs reflect the financial risk these transactions pose to the payment processors, making them more cautious when working with businesses that rely on MOTO payment processing. Here are some specific reasons that a MOTO Merchant Account is considered high risk.
Card Not Present (CNP) Transactions: Unlike in-person transactions where the card is physically swiped or inserted, MOTO transactions do not involve the physical presence of the card. This increases the likelihood of fraud since the merchant cannot verify the cardholder’s identity directly.
Higher Risk of Fraud: The lack of physical verification in MOTO transactions makes it easier for fraudsters to use stolen credit card information. Without additional security measures like chip-and-pin verification, these transactions are more susceptible to fraudulent activity.
Increased Chargeback Rates: MOTO transactions tend to have higher chargeback rates compared to card-present transactions. Customers might dispute charges for various reasons, such as not recognizing the transaction, experiencing buyer’s remorse, or claiming the goods or services were not delivered as expected.
Potential for Unauthorized Transactions: Since the payment information is typically provided over the phone or via mail, there is a greater chance that the person making the payment is not the actual cardholder, leading to unauthorized transactions and subsequent disputes.
Greater Likelihood of Customer Disputes: Customers might be more likely to dispute charges made through MOTO transactions, especially if there is a delay in delivery, dissatisfaction with the product, or a misunderstanding of the terms of sale.
Delayed Delivery and Fulfillment Issues: MOTO transactions often involve shipping products to the customer, which introduces the possibility of delivery issues, such as delays, lost packages, or damaged goods. These issues can result in customer dissatisfaction and increased chargebacks.
Compliance and Security Challenges: MOTO merchants must adhere to strict PCI-DSS (Payment Card Industry Data Security Standard) compliance requirements to ensure that customer payment data is handled securely. Failure to comply can increase the risk of data breaches and result in hefty fines.
Limited Verification Methods: MOTO transactions rely heavily on information provided by the customer, such as the billing address and CVV code. These methods are less secure than in-person verification techniques, making it harder to detect fraudulent transactions.
Tools to Combat Fraud in MOTO Payment Processing
Combating fraud with a MOTO Merchant Account requires implementing a combination of security measures and best practices. Here are some of the most effective strategies:
1. Implement AVS (Address Verification System)
- What It Is: AVS verifies the billing address provided by the customer against the address on file with the credit card issuer. It helps ensure that the person making the purchase is the legitimate cardholder.
- Why It Works: AVS helps detect mismatches in the address information, which can be a sign of fraudulent activity. Many payment processors offer AVS as part of their service, and using it can reduce the risk of chargebacks due to unauthorized transactions.
2. Use CVV Verification
- What It Is: The Card Verification Value (CVV) is the three- or four-digit code on the back of the credit card. Requiring customers to provide this code adds an extra layer of security.
- Why It Works: Since the CVV is not stored in databases, even if a fraudster has the card number and billing address, they may not have the CVV, making it harder to commit fraud.
3. Monitor and Analyze Transactions
- What It Is: Regularly monitor transactions for unusual patterns or behaviors, such as multiple transactions from the same IP address, a sudden increase in transaction volume, or orders from high-risk regions.
- Why It Works: Early detection of suspicious activity allows you to take immediate action, such as flagging or declining transactions, to prevent potential fraud.
4. Use Secure Virtual Terminals
- What It Is: A virtual terminal is a web-based payment processing system that allows merchants to manually enter payment information for MOTO transactions.
- Why It Works: Secure virtual terminals provided by reputable payment processors include encryption and tokenization, protecting sensitive payment data from being intercepted or compromised.
5. Require Strong Authentication
- What It Is: Implementing multi-factor authentication (MFA) for customers can add an additional layer of security. This could involve sending a one-time password (OTP) to the customer’s phone or email to verify their identity before completing the transaction.
- Why It Works: MFA makes it significantly harder for fraudsters to complete unauthorized transactions, even if they have the customer’s credit card information.
6. Establish Clear Return and Refund Policies
- What It Is: Clearly communicate your return and refund policies to customers at the point of sale. Ensure that these policies are easy to understand and accessible on your website.
- Why It Works: Clear policies can reduce misunderstandings and potential chargebacks by setting proper expectations for customers.
7. Keep Detailed Records
- What It Is: Maintain comprehensive records of all transactions, including customer communications, order details, shipping confirmations, and any verification steps taken.
- Why It Works: In the event of a chargeback or dispute, having detailed records can help you provide evidence to your payment processor, increasing your chances of winning the dispute.
8. Educate Your Staff
- What It Is: Train your staff to recognize the signs of fraudulent orders, such as mismatched billing and shipping addresses, unusual order quantities, or rush shipping requests.
- Why It Works: Well-trained staff can serve as an additional line of defense, identifying potential fraud before it becomes a problem.
9. Partner with a Reputable Payment Processor
What It Is: Choosing the right payment processor is crucial, especially for businesses handling MOTO (Mail Order/Telephone Order) transactions. A payment processor that specializes in MOTO transactions, like Durango Merchant Services, offers advanced fraud detection tools specifically designed to protect your business from the unique risks associated with card-not-present transactions.
Why It Works: Durango Merchant Services provides the technology and support you need to minimize fraud risk, including real-time transaction monitoring, robust chargeback management, and enhanced security features. By partnering with Durango, you ensure that your business is equipped with the best tools to prevent fraud, protect customer data, and maintain a smooth, secure payment process. With Durango’s expertise and tailored solutions, you can focus on growing your business while they handle the complexities of secure payment processing.
How to Secure a MOTO Merchant Account
- Manage your expectations. No matter how careful you are about spotting potential fraud, how good you are at developing customer relationships and avoiding chargebacks, or how strong your business’s finances are, you’re not going to find the same rate for a telephone and mail order credit card processing account as you would for a swiped-card account, simply because of the Card-Not-Present (CNP) quality of the transactions. It’s just the nature of the beast, and not a slight against your business.
- Look for ways to offset concerns. If your industry experiences high rates of fraudulent purchases, working up a comprehensive strategy for fraud prevention may help ease some of the payment processor’s worries. Requiring the CVV2 number on the back of a card, and address verification, are security measures that are helping many businesses reduce fraud, but keeping up with the ingenuity of identity thieves is a never-ending race. Similarly, if your business deals in big-ticket purchases that could make it hard to cover a chargeback, you may be able to negotiate with the financial institution managing your account to hold a portion of your funds as a cash reserve against such costs.
- Stick it out and renegotiate later. If your MOTO merchant account performs well over the first three years, your rates are likely to improve. Durango Merchant Services has extensive experience negotiating processing account terms for high-risk merchant clients.
National and International Options for Mail Order and Telephone Order (MOTO) Merchant Accounts:
Durango Merchant Services works with several gateway processors and suppliers with sponsor banking relationships that provide both US based national and international credit card processing solutions. We can provide merchant accounts for the Mail Order and Telephone Order companies under one of the following two options:
Requirements to open a merchant account for MOTO businesses in the USA:
- Company entity based in the USA.
- REPRESENTATIVE of the company based in the USA.
- Bank Account is in the USA
Requirements of the European Mail Order and Telephone Order merchant account:
- Minimum $ 50,000 USD per month in sales
- The company must be based in the EU
Merchant Service Prices and Contract Terms:
If you are looking for a Mail Order and Telephone Order merchant services provider, contact us by email or call us today to discuss setting up a merchant account for your business. We will discuss the following:
Available prices for MOTO processing:
- Discount rates that range between 1.95% and 4.95%
- Authorization fees ranging from: $ 0.15 to $0.25
- Monthly installments: rates ranging from $ 5.00 per month to $ 60.00 per month
Other terms of the telephone order or mail order processing contract:
- Rolling reserve requirements that range from: 0% of the rolling reserve to 10% of the rolling reserve
- Variable contract lengths including availability of month to month
- Free application processing
- Direct financing with regular deposits (either daily or weekly depending on international vs. onshore)
Additional benefits of the telephone order or mail order merchant account:
If you get a MOTO merchant account with Durango Merchant Services, then you will also be eligible for other benefits that we offer, we can set you up with electronic commerce and recurring billing via our online portal. Businesses can receive the following additional benefits:
- PCI-Compliant Virtual Terminals: We equip you with virtual terminals that feature state-of-the-art security technology to safeguard sensitive transaction data.
- Wide Payment Acceptance: Accept all major credit and debit cards, plus eChecks and ACH transfers, making transactions easier for your customers.
- Enhanced Data Processing: For B2B transactions, our Level 2 and 3 data processing capabilities help lower your rates when you accept commercial credit cards, including p-cards.
- High Ticket Processing: Handle large transactions seamlessly with our high ticket processing features.
- Advanced Online Reporting: Get detailed insights into your business’s performance with our robust online reporting tools.
- Automated Solutions: Streamline your operations with automated invoicing and recurring billing plans.
- Chargeback Prevention & Support: We provide chargeback prevention tools and a dedicated team to guide you through safeguards tailored to your business. From return policy wording to fulfillment practices, we help you avoid disputes—and we’re with you every step of the way when it comes to fighting and winning chargebacks.
- Advanced Fraud Protection: Customize fraud filters and set thresholds to flag and hold suspicious orders before they’re authorized.
- User-Friendly Merchant Dashboard: Easily search transaction history, manage customer data, issue refunds, and more, all from a centralized dashboard.
- Seamless Integration: Our services integrate smoothly with your existing software, linking your accounting platform, inventory system, and other compatible apps with your virtual terminal to reduce your administrative workload.
- Multi-Currency Capable Gateway: Our gateway supports multiple currencies, enabling your business to cater to international customers with ease, and handle transactions in various currencies without any hassle.
- State-of-the-Art Virtual Terminal: Our virtual terminal is designed with cutting-edge technology, providing a secure, efficient, and user-friendly platform for processing MOTO transactions.
We provide Mail Order and Telephone Order merchant accounts for the following:
- Startups and existing businesses – we help all types of businesses
- If you have been Previously rejected or discarded by another processor, we can help you get back on track
- High ticket merchants and merchants with bad credit
- Minimum processing: $5,000 minimum for national accounts, $50,000 for international accounts
MOTO Merchant Accounts With Durango Merchant Services
Our dedicated team negotiates on behalf of more than 30,000 clients. We understand the back and forth and give and take of negotiating processing accounts for high risk merchants.
