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Credit Card Processing Keyed vs Swiped Merchant Rate

swiped vs keyed credit card ratesSetting up a merchant account can be confusing. If you’ve ever spoken to a sales person from a merchant services company, you’ve likely heard many different rates quoted. One rate that always comes into play in the world of credit card processing is keyed vs. swiped rate.

Of all the varying rates and fees associated with accepting credit cards, it’s important for merchants to take particular notice of swiped vs. keyed rates.

We all know that swiped transactions are those where a credit card is swiped through terminal and the magnetic stripe is read. The new version of swiped is “dipped” in which a card with an EMV smart chip is inserted into a special slot in the terminal. EMV will soon replace the antiquated swiped technology, as it is far more secure than magnetic strip technology. But, that’s another story.

Like it sounds, keyed credit card transactions are those that require the credit card data to be manually entered into a terminal’s keypad or a virtual terminal on a computer. This data includes everything; card number, expiration, name on card and security code.

Obviously it’s really not physically possible to for an online retailer to swipe customer credit cards for Internet purchases. Therefore, online transactions are always considered keyed transactions. And even when it’s the customer entering their information in an online shopping cart, it’s still a keyed transaction.

Brick-and-mortar or physical retail storefront businesses handle customer-facing sales. When given the option, these merchants should always try to swipe first and key in second. It doesn’t always happen this way.

Most of the time, keyed transactions in physical stores take place when damaged mag stripes are unable to be read. Other times, it’s a malfunctioning terminal. And sometimes it’s plain ignorance on the part of the sales person that is unaware of the best practice.

But why does it really matter? Cost. Keyed rates are always higher than swiped. Merchant account services have a rate for swiped transactions, and another rate for keyed transactions.

In the mindset of the banks, keyed transactions are thought of as ‘card-not-present’ transactions, even when the card and its owner are present. Card-not-present transactions are considered higher risk because there’s a greater potential for fraud.

Thieves know that they have a better chance of making a purchase with a stolen credit card or stolen data and getting away with it in the virtual world rather than in person.

With the adoption of EMV technology in the United States, stealing credit card data will prove more challenging for would-be criminals and credit card fraud will likely drop to some degree.

However, keyed transactions will likely always be considered riskier and will likely continue to have a higher credit card processing rate.

At the transaction Group, we’ve been assisting businesses with merchant account services since 2004. If you’d like more information about keyed rates and swipe fees, or other merchant account questions we’d be happy to help.

Call us today @ 888-383-8056