Credit Card Processing Using VoIP

Using VoIP for card payments

By Rob Binns | Senior Writer

It is widely recognized that the availability of credit card processing services through POS (Point of Sale) and online applications can significantly enhance sales and turnover for the majority of merchants in a range of market sectors.

credit card processing using voip

Statistics have estimated that there are a minimum of 1,013,000,000 credit and debit cards in circulation within the US; with 1 in 3 consumers choosing to use a card for their transactions, 90% of online purchases are being made via the facility.

Also consider that the average US customer will spend 4 times more per transaction when using a credit or debit card than when using cash or a checking account ($3.7 trillion annually) and it soon becomes a no brainer that credit card processing, through whatever medium, is a vital element in any successful business.

What is IP Card Processing?

IP stands for Internet Protocol and is a set of rules used to standardize the way information is transmitted across the internet. This ensures that all machines can communicate globally in the same language.

What are the Benefits of an IP Card Terminal?

Most cheaper credit card terminals are connected through a telephone line dial up system. It can take up to 10 seconds for the POS device to dial into the processor’s software and wait for a response.

Internet connected terminals take a fraction of the time – only 2 to 3 seconds – which significantly reduces waiting time for clients and merchants alike, which effectively means more transactions can be processed in the course of a day.

What does VoIP Card Processing Require?

To enable quicker processing with an IP connected terminal you will need access to:

  • Broadband Router
  • RJ-45 Ethernet cable
  • IP enabled credit card terminal
  • Merchant account gateway information and programming instructions

Risks to Consider

For those businesses who are using VoIP (Voice over Internet Protocol) provided by their Internet Services Provider for the processing of customer transactions through their POS terminals, there may well be a danger of finding themselves at risk from so called MITM (man in the middle) attacks.

Using a credit card terminal which has connection via digital phone lines or VoIP for the processing of sales and data may also not meet compliance legislation laid down by the PCI (Payment Card Industry).

This could result in the loss of benefits and privileges offered by the chosen service provider or, in the worst case scenario, being sued by a client who may have had their personal data stolen by a third party; this is a particular problem as any transactions processed over VoIP will be transmitted via the Internet with no way in which to encrypt the data.

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Merchants who are using terminals which utilize connection via a traditional analog phone line will still meet PCI compliance as the technology affords very little opportunity for third party interference.

Conversely, VoIP is highly susceptible to MITM attacks as the attacker may easily eavesdrop on, or interface with, the originator’s data, thereby capturing the highly sensitive credit card information of the client.

Despite the fact that most processing hardware which utilizes phone lines will be incompatible with VoIP technology (due to dropped packets) even failed attempts to process a transaction may lead to a third party having access to steal the sensitive customer data.

There are, however, opportunities to work around the issue of PCI non-compliance. Many processing terminals will provide an Ethernet Port through which customer details and transactions may be transmitted through an encrypted Internet connection.

The chosen credit card processing provider will be able to help the merchant with set up, generally at no extra charge for the service.

Although it may incur a higher level of business charges when compared to a traditional dial up phone line terminal, switching to a wireless credit card processing device will deliver the merchant the benefits of secure connection and encryption on all the transactions they process.

Through the use of GPRS (General Packet Radio Service) and cellphone technology, this method will provide a good option for those businesses who sell their services and goods on the road; it will also provide 100% PCI compliance.

How Much is Does it Cost?

IP enabled credit card terminal prices start from around $170 and can reach up to $600. Specifications to check include:

  • Transaction processing times.
  • Which card payments are accepted – debit, credit, MasterCard, American Express and Discovery are widely accepted but would you like your business take EBT, gift cards or contactless payments?
  • Security and encryption features.
  • Memory capacity and integral processor.

It is advisable to check suitability for your business as well as price and it’s always worth comparing a number of different suppliers.

Proceed with Confidence

Overall, the utilization of VoIP technology to the processing of credit and debit cards can deliver considerable benefits to merchants and consumers alike; transactions may be processed speedily and efficiently providing greater rates of productivity for the store holder and a more enjoyable shopping experience for the customer.

Features such as real time authorization from the card services provider and the verification of checks will ensure that both parties can enjoy the peace of mind which comes with the deployment of an application with a robust and reliable theft and anti-fraud protection inbuilt.

Rob Binns
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings industry-specific knowledge of CRM software, social media monitoring, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny corner, with a beer and a battered copy of Dostoevsky.

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