Other ways of taking payments

This chapter is designed to tell you how to accept payment types OTHER than “card present” transactions.

That means we’ll talk about telephone, payments, bank transfers, cheque payments, and peer-to-peer and bitcoin transactions. We won’t cover online payments, which are covered in e-commerce 101. We’ll also mention mobile payments – but these are technically a form of card present transaction and usually take no extra action to set up.

Finally, we’re going to touch on chargebacks, and how we can avoid them.

I. What Is a "Card Not Present Transaction"?


The standard way that payment people carve up transaction “types” are whether there’s a card physically next to a till – or not.

The types are:


“Card not present” means that somebody IS paying by card, but the card isn’t at the till.

For payment people, it means it all goes through the card infrastructure, called “the interchange.” For you, it means that you should pay similar fees to what you pay on cards – but sometimes with additional costs.

Examples of card not present (“CNP”) transactions include telephone payments and online payments. Interchange rates can be different for CNP transactions but aren’t usually higher – remember, you can check the interchange rate for VISA or Mastercard whenever. Sometimes, providers will try to mark you up, but if you expect a significant portion of your transactions to be CNPs your rates should be as good as for card present. The rates indicated in the table below are high, and you should only accept them if you have a small proportion of your card spend coming through CNP.

If your margin is…Definitely don’t pay more thanRisk of chargeback
Chip and PIN1.75%Low
Contactless Mobile Payment
Magstripe and signatureModerate
Card not
Telephone payments2.5%Moderate
Online – Payment Gateway
Online – Email Payment Link
Online – PayPal
No card Online - Peer-to-peerVariesVaries - depends on policy
Bank transfer0%Very low
BitcoinNot possible


2.5% is pretty expensive.

It’s ok if you’re taking a few phone orders – but not if you’re an e-commerce store!


You don’t need to do anything extra to accept contactless mobile payments.

 Nearly all new card readers come with “NFC” technology, required to take them.

If you’re having trouble, look about in the settings to make sure NFC is turned on!

II. Issuing An Invoice

Often, someone will pay over the telephone, cheque, or bank transfer in response to an invoice.

Invoices don’t dictate how a customer can pay. Issuing an invoice isn’t hard but there are a couple of rules you need to follow. The customer is meant to pay you within 30 days of receiving the invoice.

An invoice should have :

  • A unique number
  • Their company name and address
  • Your company name and address
  • Total amount owed
  • If applicable, a breakdown of amount owed
  • If applicable, VAT including breakdown
  • Dates – of the invoice, that the goods/service was provided
  • A description of the good/service
  • If you’re a sole trader, you have to add your name and an address for any legal correspondence to you

Other than that, format it how you like! It’s quick and easy to Google templates for invoices and there are no legal requirements for how you format it.


Your EPOS system can normally generate the unique number and keep track of them.

Otherwise, the only rule is that it’s unique!


If the customer fails to pay, you have a couple of options. The first is to go through a debt mediation service – which is like a lawyer, but cheaper. They’ll consider both sides of the dispute and make a judgement.

The second is to issue something called a statutory demand which gives them a further 21 days to pay you. At that point, you can apply to bankrupt them and/or hire a lawyer.

Late payments are subject to 8% annual interest although you can choose to waive this.

III. Card Not Present Transactions


I. Set up phone payments

To accept card payments over the phone you need to set up something called a virtual terminal. The way that this will work is you entering card details which they read aloud to you.

You also need to be PCI compliant, which is the law around sensitive card details. You can organise the self-assessment here

You can usually set up a virtual terminal through your current provider, or preferred provider – but if they don’t have it available, and phone payments are really important to your business, you can sign up through a payment facilitator very quickly. (For a breakdown of which payment facilitator would be best for you, skip ahead to chapter 4).

II. Take phone payments

When a customer asks to pay over the phone, go to the page of the virtual terminal you’ve set up. It will ask you to key in the value of the item (you may be able to do this by selecting the item via your EPOS software). Then it will ask you for the card details.

The system is very likely to generate a random security question which the cardholder should be able to answer. Finally, click “enter” or “process” or “submit” – and the payment has occurred. You can do things like email receipts after, and you’re meant to keep the customer on the phone until the payment has gone through.

III. Choose phone payment provider

In a sense, this should be the first thing you do – but you’re generally likely to continue using your normal provider.

But if you can’t use theirs, here’s a sneak peak of the different rates via payfacs.


2.95% – must use sum up EPOS



Paypal HERE

3.4% + 3p


No telephone payments. But 2.5% for CNP


We’re going to cover online payments in e-commerce 101.

We promise, e-commerce isn’t that scary!

Risk and

Chargebacks are when a customer calls their bank and disputes a payment. The bank will almost always take their side – and reimburse them the cost of the item at your expense. They might also add a fee for processing the chargeback.

Chargebacks are a rule on card networks – so they don’t exist for transactions which don’t involve a card.

If a customer deposits money in your account erroneously via transfer or cheque, there’s much less a bank can do about it – and it would be highly unusual for a bank to seize funds and give them back to customers in the same way they do with chargebacks. So normally, chargebacks happen on card payments.

A customer can order a chargeback if:

I. The item is “significantly not as described”
II. The item never shows up
III. It was an “unauthorised transaction” – i.e. it was fraud.

This means that while it’s not impossible that a customer will chargeback something they’ve bought in-store, CNP transactions see a much much higher rate of chargeback occurance.

Avoiding Chargebacks

1. Use a clear payment descriptor

The most common reason people ask for chargebacks is that they don’t recognise the description of your company on their bank statement. (“I have no memory of shopping at” – *peers in* – “BILLYS STRIP CLUB – I will charge it back.”)

Most payment providers will standardise this with your given company name but with some (e.g. Stripe, who do e-commerce) it’s customisable. Your payments provider controls this – so contact them if you’re concerned.

2. Make sure you can be contacted

Lots of customers resort to their bank only after attempting to contact the seller with an issue or complaint. Maintaining communication with customers is important!

3. Spot Fraud

This is a pain, but is possible if you’re concerned about large purchases. If the billing and shipping addresses don’t match; or they get some card details wrong first time; and it’s a large purchase, it could be worth inquiring to check they’re real.

4. Keeping Records and Disputing

This will only sometimes work. It helps if you keep a detailed account of shipping, but you should understand that the shipping company is not responsible for verifying the payment at any stage or the identity of the buyer, even with signed packages – and that they’re therefore not liable. Signed documentation does help dispute chargebacks – especially if they describe exactly what a customer should receive.

IV. Non Card Payments


In the case of bank transfers and cheque payments, the money gets sorted by Clearing Houses – you may have heard of BACS or CHAPS. It isn’t the purpose of this guide to go into how clearing houses work – but it’s an alternative structure to card networks. You shouldn’t have to pay a fee for the processing which takes place via a clearing house.


To accept a bank transfer as payment, tell your customer your bank details, and deduct the stock from your EPOS system. It will take a few days to go through so this is usually done in response to an invoice.

In some cases you can sync this with your EPOS system such that the EPOS updates when you receive payment and the order is put in motion then.

It’s standard to produce an invoice if you are planning to accept money by bank transfer – although it’s not a legal requirement.


For cheques, payments work exactly as you would expect. It should be made out to your company in with the company business bank account details. Cheques are usually written in response to invoices. If you cash a cheque via a third party they will charge a significant fee – it’s usually better to go to your bank directly.

It’s good practice to deposit a cheque quickly after it has been issued so that the customer remembers what the payment was for when it’s deducted from their account.


Cash remains the second most popular way of paying for things after cards. You may wish to browse our superb selection of cash drawers, available here


Peer-to-peer refers to lots of different types of payment service.

Broadly defined, “peer-to-peer” (P2P) means there’s an organisation (sometimes called a wallet) holding the customer’s money, and the same organisation is holding your money, and that therefore, they can move the money from one account to the other without lots of multiple parties taking a fee. (They may take a fee themselves.)

In theory, this should bypass the card networks – no VISA or Mastercard – meaning that the money does not go through the interchange so you don’t have to wory about the complex billing described in this guide! However, in practice, that’s not how things normally work. For example, the most famous example of a P2P payments company is PayPal. If you have a PayPal account, you’ll notice you have a “PayPal balance”, and “saved cards”. If you pay for something with your PayPal balance, PayPal own the transaction and it does not go through the card network – so it’s a P2P transaction. If you pay for something with a saved card, it goes through the card network, meaning it’s not really P2P.

(PayPal keep the fees for merchant identical in both instances – so they make a lot more money when a customer pays with their PayPal balance.)

To accept P2P transactions, you need to create an account with a P2P provider and advertise that you accept it so that other users of that app know they can pay in that manner. P2P apps include Venmo, The Cash App, PayPal, Pingit. This is the second most popular way of paying for things after cards.


Bitcoin (BTC) is a “cryptocurrency”; just like Sterling (GBP) is a paper currency. Just as there are lots of different kinds of paper currency (USD, EUR) there are lots of different cryptocurrencies. Bitcoin is by far the most famous, but others include Ether, Ripple, DogeCoin, and Z-Cash.

A cryptocurrency is like a normal currency, with one or two differences – it’s online (you hold it via a web wallet), it’s not issued by a central bank (which means it’s very volatile in terms of how much it’s worth). Unlike P2P transactions, there’s no company which controls the how the money moves.

The really clever innovation behind cryptocurrency is that unlike virtually anything else online, they cannot be simply “copied” by a computer. That’s because there’s a ledger of who’s moving what money where which is shared between lots of computers, all keeping count (you’ll sometimes here this called a “distributed ledger” or the “blockchain”).

It’s not a hard process to accept bitcoin in store – but it’s not a smooth process. You’d need to set up a web wallet via a wallet provider – then, satisfy to yourself that someone had “sent” the bitcoin, probably by showing you the outgoing transaction from their web wallet on their smartphone.

IV. What's Next

Understand Card Fees In 5 Minutes
Learn what you’re looking at when you read your payments bills.
Other ways of taking payments
Accept cards over the phone and by invoice.
Acquirers (+ISOs) WorldPay First Data Bluebird
When would an acquirer be better?
Card Networks, The Interchange and all that
The academic view: how do payment actually work?
When Can I Negotiate?
How to get on better rates than your mates
E-Commerce 101
Ready for the next frontier?
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