Why Are MOTO Merchant Accounts High Risk?

Florence Carpenter

With the quantity of U.S. retail sales up by 18% in June 2021 compared to the previous year, merchant accounts are becoming more useful than ever to facilitate online transactions for retailers. However, MOTO or Mail Order/Telephone Order payment methods are still being used by shoppers who prefer to order through the mail or telephone. 

These card-not-present transactions are considered to be at higher risk for fraud and chargebacks compared to card-present transactions, like those made in a brick-and-mortar store. This is because they tend to be perceived as less secure since it is harder for the merchant to verify the identity of the cardholder.

What Makes MOTO Accounts High Risk? 

For businesses to accept MOTO payments, they need to partner with a high risk merchant processor for added security and convenience. Unlike payments through mobile platforms or those made using a chip or pin-encoded payment terminals, the customer may not be present at the time of purchase. As a result, MOTO processing comes with higher bank fees. 

In addition, there is more room for error when an individual manually enters financial information as opposed to the customer. In the event of fraud, the merchant bank account will have to pay the cost of MOTO transaction. In contrast, the card-issuing bank is responsible for paying the fee for an in-person transaction.  

Without the proof of a signature or PIN number that can prove a valid charge, disputed MOTO payments can cause significant difficulties. 

In order to make MOTO transactions more secure, you can add an address verification service (AVS) to check whether billing addresses match. Delayed capture can also help you cancel a transaction that seems suspicious. 

Before choosing a merchant provider, learn more about how MOTO credit card processing works so you can negotiate the best contract lengths and keep an eye out for any hidden fees. 

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