MO/TO is an acronym that stands for Mail Order, Telephone Order, specifically referring to a merchant or a sales environment in which mail or telephone sales are the primary or a major source of revenues. This classification of merchant account has a specific set of rules that is more restrictive than the rules for retail merchants but the classification enables a merchant to accept a credit card payment without a cardholder’s signature. The merchant and the cardholder do not need to be in the same physical location and because of this, these types of transactions are considered to be higher risk by the card associations.
If a fraudulent transaction is reported, the bank that hosted the merchant account that received the money from the fraudulent transaction must make restitution. Whereas in a swiped transaction the bank that issued the credit card is liable for restitution.