Mail Order & Telephone Order (MOTO) Merchant Accounts
More people every day are using the internet for an ever-expanding variety of purchases, from airline tickets to pizza delivery. With this increased push toward online transactions, does that mean the more traditional MOTO (mail order/telephone order) payment processing method is on its way out? Absolutely not! Despite the convenience of eCommerce, there are several reasons that a customer may prefer placing an order by phone or mail order.
- Some shoppers, especially those of older generations, may not be as comfortable with internet-based payment portals.
- Customers who are more tech-savvy may have legitimate concerns about data security and identity theft.
- Shoppers may have questions about a product that are best answered by a real, live person, with whom they can then place their order directly.
While it’s clear that MOTO credit card processing is still very much an important component of commerce across numerous industries, it’s also true that it can be hard for an entrepreneur or small business owner to get a mail order or telephone order merchant account at a decent rate, if they find a payment processor willing to approve them in the first place.
What is a Mail Order and Telephone Order (MOTO) merchant account?
MOTO, or Mail Order/Telephone Order businesses require high risk payment processing because of their card-not-present (CNP) nature. Card-not-present transactions involve accepting payment without the customer and card being physically present in your store. These types of transactions generally have a high risk of fraud. Types of CNP include online payments and payment received through telephone, mail, or fax.
Why are MOTO merchant accounts considered high risk?
MOTO card processing involves accepting payments when the customer (and therefore, his credit card) and the merchant are not in the same place. Payment processors consider these “Card Not Present” transactions to as inherently higher risk than transactions in which a customer swipes their credit card at a brick-and-mortar store. This is partly due to the ever-present threat of fraud, and partly due to the greater potential for buyer’s remorse and second thoughts. Institutions that offer payment processing accounts are taking a risk with every transaction! If the customer cancels or disputes a charge and the merchant doesn’t have the funds on-hand to cover the chargeback, the payment processor has to cough up the customer’s refund.
Unfortunately, this higher risk of chargebacks, fraud, and other problems could cost the payment processor money. This means that the risk is reflected in higher rates, increased restrictions, and stricter scrutiny – especially for merchants seeking mail and phone order credit card processing.