What Is MOTO Payment Processing & How Does It Work?

Mail Order/Telephone Order (MOTO) payment processing enables businesses to accept payments without the customer or their physical card being present. This method allows for remote transactions, providing flexibility for consumers and businesses alike.

Defining MOTO Payments

MOTO payments refer to transactions where customers provide their payment card information to businesses remotely, typically over the phone or through mail. This also includes transactions initiated via fax or by using securely stored card-on-file details. MOTO’s defining characteristic is its “card-not-present” (CNP) nature.

This distinguishes MOTO from traditional in-person transactions where a card is swiped or tapped, and from standard e-commerce where the customer directly inputs their details online. In MOTO, the customer authorizes the merchant to manually enter their card information into a payment system. Businesses such as call centers, reservation services, and those handling recurring billing or catalog sales use MOTO processing. This payment method offers convenience for remote customers and supports specific business models that do not rely on physical storefronts or direct online self-service.

Processing MOTO Transactions

The processing of a MOTO transaction begins when a customer provides their payment details, such as the card number, expiration date, and Card Verification Value (CVV) code, verbally over the phone or in writing via mail. The merchant then manually inputs this information into a secure system. This input occurs through a virtual terminal or a MOTO-enabled payment gateway.

After the details are entered, the system sends an authorization request to the payment processor, which then forwards it to the card network and the customer’s issuing bank. The bank verifies the card’s validity and the availability of funds before sending an approval or decline response back to the merchant. Upon approval, the merchant confirms the transaction with the customer, and the funds are batched for settlement later. To mitigate fraud, security features like the Address Verification Service (AVS) are often employed, which compares the billing address provided by the customer with the address on file with the card issuer. Similarly, CVV checks verify the three or four-digit security code on the card, ensuring the customer possesses the card.

Implementing MOTO Payment Solutions

Businesses seeking to implement MOTO payment processing must first obtain a merchant account specifically configured for card-not-present transactions. These accounts often carry different risk profiles and associated fees compared to card-present accounts due to the increased potential for fraud. A payment gateway or virtual terminal is an essential technological tool, enabling secure manual entry and transmission of card data for MOTO transactions. A virtual terminal, accessible via a web browser, allows employees to process payments by hand without requiring physical point-of-sale hardware.

Adherence to Payment Card Industry Data Security Standard (PCI DSS) requirements is necessary for businesses handling sensitive cardholder data. PCI DSS establishes security standards to protect payment account data, which is especially important given the manual input and remote nature of MOTO transactions. Businesses must also establish secure internal procedures, including training employees on the proper handling of sensitive data and maintaining diligent record-keeping for all transactions. These operational considerations help ensure compliance and reduce the risk of data breaches and chargebacks.