Accept Credit Cards Over the Phone Correctly

All retailers must perform each of the following actions each time they accept credit cards over the phone.

Collect the Transaction Data

Collect all of the following transaction information from the customer:

• The card account number.
• The customer's name.
• The card account's expiration date.
• The retailer's name.
• A description of the product or service purchased.
• The total amount of the card transaction (including any applicable sales tax and / or tip amount).
• The transaction's date.

Obtain an Authorization Approval

If merchants accept credit cards over the phone, they must transmit all of the above data with all of their authorization requests. For delayed delivery sales, the merchant needs to obtain the authorization approval before they submit the sales data to the credit card processing companies for the sale at issue. The authorization approval the merchant receives will be valid for ninety days. The retailer may obtain the authorization approval from the issuer by an electronic device or telephone. The issuer will issue an authorization code, which must be placed on the transaction receipt, unless the approval was obtained using an electronic machine or a cash register. If the retailer uses an electronic device, it must transmit to the issuer the complete contents of the magnetic stripe on the bank card presented for payment for each card transaction, together with each authorization request the merchant initiates. If it accepts a card for a sale without obtaining the issuer's prior authorization approval in the fashion described above, the processor is not required to pay the merchant for the sale, and if the processor has already paid out the amount, it will process a chargeback for it. Even if an authorization approval is issued for a given card sale, this should not be seen as a guarantee of payment. A card sale may also be subject to a chargeback to the retailer for a number of other reasons, as listed in the processing agreement.

If the issuer's electronic authorization system is not available, the floor limit for the duration of the system downtime will be $150.00 for all card sales for the sale of products for which a cardholder takes immediate possession. Merchants are not allowed to use this floor limit exception to authorize transactions requiring any delayed delivery for shipping: rather, they should get an approval whenever the electronic authorization system is again available. The precise date, time and duration of the system outage will be registered by the issuer. To avoid chargebacks for unauthorized transactions during a system downtime, the merchant should notate the precise time of the transaction in the approval box on the transaction slip.