Understanding Moto Merchant Accounts and Credit Card Processing

A MOTO (mail order/telephone order) merchant account was originally created to address the credit card processing needs of mail order companies who receive all of their sales by mail or telephone. Also known as a virtual terminal, MOTO merchant accounts allow you to process credit and debit card payments easily and securely over the phone or from orders received by fax.

MOTO merchant accounts work with higher risk as the cardholder is not physically present and are ideal for businesses and customers alike that prefer personal contact. A MOTO merchant account is similar to a conventional internet merchant account (IMA) in the sense that they both offer cardholder not present (CNP) processing solutions.

The risk from fraud is higher due to the CNP nature of the transactions. Address verification and CVV2 (number on the card signature strip) have helped in checking this menace and preventative measures continue to develop.

The following steps will help in better understanding of the MOTO Credit Card Processing –

1. The customer calls or mails in an order to the merchant and provides their credit card information. The merchant enters the card information and sale amount it into a credit card terminal, PC software or payment gateway.

1. The processing system connects to merchant warehouse’s processor for authorization.
2. The processor passes the sale information on to the bank that issued the credit card which checks to see that the card is valid and if the amount requested is available on the account.
3. The issuing bank sends an approval number or a decline message back to the processor.
4. The information is passed back to the processing system which gives the merchant the approval number and allows them to print a receipt for their records.
5. The merchant must “settle” their processing sales on a daily basis which begins the final process in the transactions. The sales proceeds are then transferred from the card issuing bank and are electronically deposits into the merchant’s checking account.

From the time of the original transaction, it typically takes two business days for the funds to reach the merchant’s checking account.