How to take card payments over the phone: a step-by-step guide

Taking payments over the phone safely and quickly is a pretty simple process. It comes down to signing up with a merchant service provider, then choosing either a virtual terminal or a card reader. You’ll have those over-the-phone payments rolling into your account in no time – just keep in mind that you’ll still be subject to pesky credit card processing fees.

Overall, we recommend a virtual terminal for taking card payments on the phone, as it’s a lot easier than using a card reader – but we’ll walk you through all you need to know to use either method.

What do I need to start taking card payments over the phone?

While it may seem old fashioned, taking payments over the phone is arguably easier than taking payments online, and you have a choice of two different options for getting set up. We’ll take you through each one and what it involves.

First things first: if you’re starting from scratch, you’ll need to sign up with a merchant service provider that comes packaged with:

• A merchant account
• A virtual terminal or a card machine – or both!

A merchant account

A merchant account is a holding account, provided by your acquiring bank or a merchant service provider, that acts as an intermediary between your business bank account and your customers’ accounts – it’s the keystone of taking card payments. It’s essentially a holding pen where the customer’s payment initially goes before being sent to you.

Merchant accounts are mutually beneficial to both you and your customer, as they make payment verification as smooth as possible, and also give the customer reassurance that their money can be charged back to them in case of error.

A virtual terminal

A virtual terminal is web-based software that acts as a portal into which you can input your customers’ sensitive card information. You can access this web page through a computer, tablet or smartphone – so you don’t need to have your own website, and there’s nothing to download or install. This is good news if you’re a freelancer or sole trader who doesn’t want the hassle of building an ecommerce website from scratch.

A card machine

A card machine is hardware that allows you to take card payments from your customers. They come in a range of different styles: from card-sized portable options to large countertop terminals. They are mostly thought of for taking in-person card payments, but they can also be used to take payments remotely! You can find out which machine is best for your needs in our roundup of the best card readers for your small business.

How do I sign up for a merchant service provider?

You’ll have to do some research – every business has different requirements – – but our rigorously researched article should help you find the best merchant service provider for your particular needs.

Once you’ve decided on a provider, you can start the process of applying. You’ll be able to do this online. Each provider will have its own specific requirements, but it’s a safe bet you’ll need at least the following:

• Personal details: Basic identification such as a passport and proof of address
• Business plan: An overview of what type of business you run and what you sell
• Turnover expectations: An estimate for how many card payments you’ll be taking, as well as the average transaction value
• Method of receiving payments: How you’ll be expecting to receive payment (in this case: over the phone!)
• Trading accounts: Any recent or relevant trading documents you can use to support your application

After you’ve submitted your application, you’ll need to wait to hear whether you’ve been approved or not. This could take up to a week or longer depending on how new your business is.

Once you’ve been approved, your merchant service provider will be able to provide you with your merchant account, your virtual terminal, and/or your card reader! They’ll be able to help you through the setup (though you can also use third party card readers and virtual terminals if you prefer – just make sure they are compatible with your merchant account provider).

How to take a payment over the phone

So, let’s say you just answered the phone and it’s a customer asking to make a payment. Let’s go through the steps to successfully take it.

Using a card reader

You’re on the phone with your customer, who wants to order a product, pay for a service, or put down a deposit for a booking, and you need to take their payment using just a card reader.

Some of the more specific technical details might vary depending on which brand of card machine you’re using, but largely this will be the process:

1. Get your card reader ready, and select the option for manually entering a payment. Some readers might have different labels for this, such as ‘CNP: card-not-present’ or ‘Manually keyed transaction’ (Some smaller readers might have a mobile app you can connect to, and enter the information via your smartphone).
2. Enter the amount you need to charge your customer.
3. You will now need to manually enter the following information, which you should request your customer read aloud (don’t jot this down anywhere, it has to be directly inputted – or you might get fined!)
4. Ask your customer to read out: their credit or debit card number, the card expiry date, the CVV security code, and their address, including postcode.
5. Once you’ve inputted all these details and hit enter, the transaction will be complete and the customer will be charged.
6. You can then confirm to the customer the payment was successful, offer to send them proof of payment, and conclude the call.

Using a virtual terminal

Here are the steps to taking payment using a virtual terminal:

1. With your customer on the phone, you’ll need to go to your web browser and then log into your virtual terminal web page. Once you’ve successfully logged in, you’ll need to select the option for manual card entry.
2. Once this is selected, a form will appear into which you can fill the relevant information, including the total amount you want to charge. Ensure you put this information directly into the terminal – writing this information down anywhere else is breaking PCI DSS regulations.
3. Start asking your customer to read the information as you input it, which will include:
   • Their full name
   • The address associated with their card (virtual terminals use Address Verification Service to verify transactions)
   • Their credit/debit card number
   • Their card expiration date
   • The CVV code on the back of their card
4. The last step will be to verify the CVV code, then you can authorise payment to your merchant account. You can now confirm to your customer that payment has been successful and provide them with a receipt or a proof of payment reference number. You can then end the call.

Let’s put this into a scenario to show you how the process should work from start to finish:

1. George calls up Emily’s Cafe to make a booking for a work lunch. The restaurant staff member informs him they’ll need to take a deposit in advance for a large reservation, and George offers to pay over the phone.
2. The staff member goes to the work computer, logs into their virtual terminal, and selects the option for manual card entry.
3. The staff member then asks George to read out the relevant card information, and she inputs this into the terminal as he does so. The staff member puts this sensitive information directly into the terminal and doesn’t write it down, in order to stay fully PCI compliant.
4. The staff member verifies the CVV code, and payment is authorised to go from George’s bank account to Emily’s Cafe’s merchant account.

How to make sure phone payments are safe and secure

In order to make sure you’re taking payments over the phone safely and securely, you’ll need to ensure you’re fully PCI DSS compliant: this stands for Payment Card Industry Data Security Standards, which encompass the strict guidelines that safeguard the sharing of sensitive and personal data during card transactions. All businesses processing card payments are required to comply, and you could face some pretty major fines if you break the rules.

The easiest way to protect yourself is to select a merchant service provider that is already PCI compliant. The networks and processes these companies utilise are already encrypted to the sufficient level, so there’s nothing more needed from your side. In some cases, your provider might charge a fee for full PCI compliance (a few pounds a month, at most), but trust us – it’s worth it.

How much does it cost to take payments over the phone?

The costs you’ll incur will be determined by your agreement with your merchant service provider, and any further costs associated with your virtual terminal or card machine (this will also depend on whether they’re included with your merchant account provider or are from a third party).

Some merchant service providers will charge a monthly fee, while others can provide a free plan – this extends to virtual terminals, as some will be offered as a free feature whereas others might cost a monthly fee.

The most common cost associated with taking payments over the phone is the transaction fee. This is a percentage of the sale that is taken by your merchant service provider. The exact amount will vary between providers, but the average cost is usually between 1% and 3% of each transaction.