Mail Order and 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 MOTO merchant account at a decent rate, if they find a payment processor willing to approve them in the first place.
Why are MOTO merchant accounts so hard to get?
It all comes down to risk. Much like eCommerce, 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 carry an 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.
If a particular kind of account – such as MOTO merchant accounts – inherently carries a greater risk of chargebacks, fraud, and other problems that could cost the payment processor money, that risk is reflected in higher rates, increased restrictions, and stricter scrutiny for merchants seeking MOTO credit card processing.
So what can you do?
1. 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 MOTO payment 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.
2. 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.
3. 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.
Durango Merchant Services is here to help secure your MOTO Merchant Account
Our dedicated team has negotiated on behalf of more than 12,000 clients. We understand the back and forth and give and take of negotiating processing accounts for high risk merchants, including hundreds of MOTO merchant accounts.
We know that there aren’t always easy answers. But remember, there is almost always a way forward and if you can make it through the first 3 years with a good track record, life will become much easier and your business will be better for it.