Why avoid mail order, telephone order (MOTO) payments? And what are the alternatives?

December 17, 2021

What is MOTO payment processing?

Mail order, telephone order (MOTO) payments refer to card transactions that are made over the phone or by post. They allow customers to purchase goods and services when they are not facing the merchant.

MOTO payments are popular with businesses that take phone debit card and credit card payments such as takeaways, travel agencies and mail order companies. They provide a quick and convenient way for businesses to capture payment information and process transactions.

However because the MOTO merchant and the customer never see each other in person, there is a higher risk of criminal activity. As a result, credit card processing companies will typically charge higher fees due to fraud and more chargebacks.

Technology has revolutionised the way payments are processed and MOTO payments aren’t an exception. Although MOTO payments have their place there are a number of alternatives that better safeguard your company and your customers.

What are the benefits of MOTO payments?

Fast payments

Customers expect to pay for their purchases swiftly and securely. The biggest advantage of MOTO payments is that they can be completed in minutes.

MOTO payments enable a whole range of businesses to acquire payment without having to see the customer in person. For small businesses such as takeaways, it is the most convenient kind of payment.

Reach more customers

It may seem like the whole world is online on their smartphone, yet a small minority of the population don’t have an internet connection. The Office of National Statistics found that in 2019 five million people in the UK had still never used the internet.

If a significant number of your customer base are offline, MOTO payments remain a great way to process payments. They allow you to connect with people you wouldn’t have otherwise been able to reach.

Accessible payments

A sizeable number of people aren’t comfortable or confident using online payments. Using MOTO payments can provide some customers with more peace of mind when making purchases.

Easy set-up

Setting up a MOTO payment system is straightforward. All retailers need is a phone and a payment card machine (or virtual terminal) and you’ll be able to accept payments immediately.

What are the drawbacks of MOTO payments?

Less Clarity

Roie Raitses, the business owner of FastCapital360 says that, “There are instances in which some payments that the customer believes are unauthorised are indeed real charges. There's no physical signature or record of a PIN number with MOTO, so there's no way to ensure the payment is legitimate. On the other hand, because there is no solid proof linked to the person who approved the payment, it is also more difficult to spot fraud with a MOTO transaction.”

More vulnerability

Jake Hill is the CEO of Debt Hammer, a company that used to take MOTO payments. However they stopped after reflecting on the security risks that MOTO payments posed. Jake says, “We never faced any incidents, but several of my employees expressed feeling uncomfortable with taking payment information over the phone because it wasn’t very secure. We also realized that most legitimate businesses had gotten rid of MOTO because of this very reason, so we decided that we would get rid of it.”

Increased risk

Your credit card number, expiry date and three digit CVV code is highly sensitive and should never be shared with anyone. Telling an employee your card number or writing it down on a mail-order form exposes these details.

I the majority of cases, transactions will be processed smoothly. However if you have a dishonest employee, they can use these details to make fraudulent purchases which increases your exposure to risk.

Higher costs

When a customer is in a store and makes a purchase, they are making a card present transaction. The merchant can ask the customer for personal identification as well as a PIN number at the POS terminal.

If it later turns out that the transaction was a fraudulent one, liability for it will rest with the issuer that provided the cardholder’s card, i.e. not the merchant.

MOTO payments like e-commerce transactions take place where the customer isn’t present. All of the checks that normally validate in-person transactions cannot be performed so they are less secure and liability move's away from the customer's bank.

Should a transaction be flagged as fraudulent, the merchant will be responsible for a refund and the cardholder company will collect it from them.

Because of all these factors, there higher pricing is associated with MOTO payments which can range between 3-5%. Some payment service providers will also add on an additional charge for every transaction.

What are the alternatives to MOTO payments?

If you would like to reduce your processing fees or improve security, using remote payment links is a great alternative payment method.

Payment links are sent remotely through SMS, WhatsApp or email and contain a link to a payment page where customers can pay for their purchase.

They offer more security because no employee has to input any sensitive card information. It also takes less time to process transactions as staff can simply send the link to the payment gateway which consists of a secure web page that the customer completes themself.

Remote links can also be added to digital invoices to reduce the time it takes for invoices to get paid.

At Pomelo our payment links are shielded with an extra layer of security. Merchant accounts can restrict the number of times a payment link can be opened and from what location.

Because our remote links are secure, we charge the same payment processor fee that we charge for all our other merchant service payments, which is 1.49%.

Find out more: discover payment links

How to reduce MOTO payment fraud?

If MOTO payments are integral to your business then there’s a number of steps you can take to reduce the risk of fraud afflicting your MOTO merchant account.

It won’t make sense to validate every transaction, but the customer is new and/or the value of the order is high, you will protect yourself by verifying who the customer is.

Ask for ID

When your customer makes a payment ask them to verify their identity by sending a picture of their card details and their personal ID.

Check personal information

Fraudsters may change their address details and/or request items to be sent to locations that don’t correspond to the customer's card, cardholder address or customer's name.

Secure deliveries

When sending out products, add additional checks and ask for identification/authorisation from the person who receives them.


Before the internet, MOTO payments provided a great way for businesses to process card not present (CNP) transactions. Now though, the functionality of digital payments means there’s less reason to continue using them.

Checkout times and security can all be improved by incorporating remote payment links into your payment systems. You can provide your customers with a quick and easy way to pay that will streamline your operations even further.