What Does MOTO Mean in Payment Processing?

What Does MOTO Mean in Payment Processing?
By max May 31, 2023

Integrating different payment options is one of the crucial steps in optimizing your eCommerce business operations for your audiences’ needs. If you are planning to upgrade your payment infrastructure, consider adding MOTO payments. The question is what exactly are the MOTO payments, how do they work, and what all benefits do they offer to the customer and merchant? In this post, we are going to explore the MOTO payments in detail. Let’s take a look.

What Is MOTO?

MOTO stands for Mail Order Telephone Order Transactions. You may have heard of the growing popularity of card-not-present transactions at retail and online stores. Well, MOTO is one of those only. For orders where your customers cannot swipe the card at your retail point of sale system, they can give you their details over mail, telephone, or fax. You can manually enter these card details to process the transactions on the customers’ behalf.

This payment method is common for businesses that operate remotely or in a location where a vast majority of customers prefer placing the order remotely instead of visiting your workplace. To process such transactions, you need a virtual terminal or a card machine where you can input the cardholder’s details.

Today’s contactless-payment generation prefers MOTO payments and other payment alternatives that are safer and more convenient than paying cash. The method works just like regular transactions, except that the merchant processes the transaction in this case. They have a virtual terminal, which contacts the cardholder’s issuing bank for authorization of the payment. Once they approve the transaction, the merchant and the customer will be notified about it.

How Does MOTO Work?

How Does MOTO Work?

As mentioned above, MOTO payments are processed through card machines or virtual terminals. Below we’ve explored each.

Via Card Machine: For transactions processed through card machines, you need to check the instructions on your system to know how it works. Each machine has a different process for accepting MOTO payments. Generally, you may have to do the following:

  • Input the total amount on your retail POS unit
  • Enter the customer’s card details, like their CVV, expiry date, card number, etc.
  • Choose a suitable payment option
  • Initiate the transaction and wait for the confirmation

If the customer’s bank has sufficient funds, the issuing bank will authorize the transaction and send a confirmation message. The funds will be transferred to your account in a few business days.

Virtual Terminal: This is the easiest and most convenient option for those who rely on their staff for processing MOTO transactions. A virtual terminal is accessible on your computers. They work just like card machines. You need to input customers’ card details with their personal information, like name, address, and contact number. Like card machines, virtual terminals do not take long to process payments. The payment is transferred to the retailer’s account once the issuing bank authorizes the transaction.

Why You Should Integrate MOTO Payments Into Your Payment Infrastructure?

Accepting payments through telephone, fax, and mail won’t just make the payment processing convenient for customers, but it’s equally beneficial for merchants. Let’s check out some common benefits of MOTO payments.

Improved Customer Experience: It’s convenient for customers to initiate a transaction without having to be present at your retail store or swipe the card manually at the card machines. If the customer can’t visit the store for some reason, they will have peace of mind knowing that they can process the payment over telephone, mail, or fax. All they need to do is give their card details to the retailer and the retailer will manage the rest. This results in more satisfied customers that will gladly purchase from your store again.

Increased Revenues: Gone are the days when the quality of the goods was the only thing customers considered when shopping from a store. Today, they look for companies that offer convenience, smart and contactless payment options, good quality, stellar experience, and excellent after-sale service. There’s a good chance your competitors might have already embraced card-not-present transactions to improve customer experience. If you don’t want to lose your revenues, it’s important to offer flexible payment options to your customers.

Easy to Setup and Accept Payments: MOTO payments are not just convenient for customers, but they are easy to set up for merchants as well. Below we’ve explained how you can set up MOTO payments. All you need for accepting payments through this mode is a card machine. Since the system is remote, you can accept payments at any time and anywhere. Virtual terminals offer multi-user access, enabling employees to accept payment from anywhere.

Reach a Wider Audience: Another advantage of MOTO is that it allows you to extend your customer base. Convenient payment options attract the attention of people who want to pay remotely. Besides that, the system is pretty convenient for the retailer, as it saves the customers’ card details. If the customer makes a repeat purchase from your store, you won’t have to enter their card information manually.

Drawbacks of MOTO

There’s no denying that MOTO is one of the reliable and convenient payment methods for customers and merchants. But it comes with its share of drawbacks. We’ve mentioned a few below.

Risk of Chargebacks: Card-not-present transactions can result in chargeback, where a customer can claim that they never made a transaction. The issuing bank reviews their request and requests a refund. Sometimes, the customer might use this to their advantage and issue false chargebacks. The increased chargeback ratio can cause loss in revenues.

Increased Risk of Failed Transaction: There’s a high risk of failed transactions in MOTO payments. Since the information is exchanged via telephone and fax, the customer might make a mistake in their card details, resulting in declined transactions. It’s also pretty hectic for the merchant, as they have to enter the data manually. The more customers option for these payments, the longer it will take for the merchant to process transactions.

With credit card fraud becoming a common issue in the US and other countries, it makes sense for businesses to weigh the pros and cons of MOTO before incorporating it into their payment infrastructure. While the method is pretty effective, it can result in chargeback. So, it’s important to have the fraud prevention programs in place before accepting payments via telephone, fax, and mail.

Cost of MOTO Payments

A common downside to MOTO payments is that it costs you a bit higher than the card payments processed in person. Your payment processor will charge you a small percentage of the fee on each transaction processed through this method. Not just the processor, but card networks have also introduced fees for digital transactions. MasterCard, for instance, has launched a fee structure for those buying and paying for goods and services online.

These payment service providers have different fee structures. Some may charge you extra for incorporating a virtual terminal for accepting MOTO payments. For instance, a flat 2.5% of transaction fee can be applicable to all credit card transactions. The companies usually break down the fee structure into several components, including assessment fees, interchange fees, compliance and risk management fees, and so on. It’s best to discuss the transaction fee with your service provider.

Setting Up MOTO Payments for Your Business

Some payment providers, like PayPal, provide software and hardware needed to process MOTO transactions. You can even set up the virtual terminal in minutes without paying any initial setup cost. The only fee you incur is when a customer initiates a MOTO transaction.

Any employee of your organization can process MOTO transactions using this virtual terminal, as long as they are authorized to access the system. The transaction takes no longer than a few minutes to complete, and the payment is reflected on the merchant’s bank account in a few business days.

MOTO payments are considered high-risk, which is why it’s advised that merchants accepting this payment method should work with payment service providers that understand the high-risk industries. The good news is that high-risk payment service providers are available for businesses in all categories. You just need to research the PSPs that have enabled MOTO payments for other companies before and are willing to accept such payments.

Another best thing about MOTO payments is that the virtual terminal is a flexible system and is compatible with most ERP solutions. So, you will have no problem integrating the software with other applications. Not just that, but you can export the virtual terminal file to a third-party accounting software solution. This helps you transfer all the data to the accounting system directly.


That was all about MOTO payments, its benefits & drawbacks, and the steps for setting up this payment system for your online payments. Now that you know everything about this payment, the decision is up to you. You can enable it to streamline the payment operations for your customers or you can choose to avoid it to prevent unnecessary chargebacks. MOTO payments can benefit your business in the long run. Considering the growing demand for card-not-present transactions, it makes sense to add MOTO to your payment system.