A Quick Guide to Keyed Card Transactions

Credit and debit cards make it easy for customers to complete a purchase, whether in person or online. They’re incredibly popular. Statista reports that in 2021, the latest year for which full data is available, there were more than 180 credit card transactions per person in the US.

Card payment technology has grown at a rapid pace in recent years. Businesses now offer a wide range of options, such as contactless payment systems, EMV chip cards used for “dipping” style payments at a terminal, and more.

Swiping a credit or debit card is an older system to complete a card payment, but is still an option. There are also credit card transactions keyed manually into a point-of-sale system and, more commonly, by customers to complete a purchase online.

Keyed card transactions are time-consuming compared to other methods of card payments.  However, they remain a useful option when other, more efficient payment options experience technical difficulties or are unavailable.

Keep reading to learn more about keyed card transactions and how they can impact your business.

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What are Keyed Card Transactions?

Keyed card transactions aren’t a very complex concept. They’re a specific type of card transaction that involves the merchant typing in — or keying — the relevant information. This data can be entered into a point-of-sale system or credit card terminal.

A keyed credit card transaction (or keyed debit card transaction, for that matter) is sometimes also called a manual entry, along with related terms.

These phrases all reflect what sets this type of transaction apart from others. Namely, someone has to type in the card details instead of using the card’s magnetic stripe, chip, RFID, or near-field communication. For in-person, phone, and mail-based transactions, that someone is an employee of the business.

It’s worth noting that manual entry is very common in online purchases as well. In these instances, the customer completes the process themselves.

Benefits of Keyed Card Transactions

Manually typing in credit card information isn’t ideal for reasons we’ll discuss in the next section. However, this type of transaction can be vital for certain types of transactions.

In some cases, a keyed transaction is the only quick or realistic way to complete a purchase. When a customer’s card won’t swipe, tap, or dip correctly, manual entry allows the transaction to be completed.

Companies that rely on phone sales need to take card info from customers to complete the transaction. There isn’t currently an effective alternative.

The same is true for purchases by mail. Businesses that accept credit and debit card payments for a purchase through a catalog or ad don’t currently have an effective alternative either.

The payments landscape is changing due to technological innovation. However, a keyed transaction is still needed in these scenarios, at least currently.

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Drawbacks of Keyed Card Transactions

Keyed transactions are more time-consuming than other payment methods. That can mean a less efficient customer experience for in-person transactions. In situations where other card processing options are available, it makes more sense from a customer service perspective to use them.

However, liability is likely the biggest concern for merchants when it comes to keyed transactions. In situations where the card and cardholder are present (i.e. not online, phone, or mail-based transactions), many financial institutions have put the responsibility of preventing fraud in the hands of merchants.

TD Bank explains further in a document about manually keying in credit card details shared with its business banking customers. Because chip-based cards are overall very secure, TD Bank discourages manual entry because of the increased risk of fraud. The same is true of many other banks and similar institutions.

It’s important to remember that this applies to card-present transactions. That means situations where the cardholder is present, but the card cannot be inserted into the terminal, tapped, or used via a secure payment app. Online and physical businesses that are approved to accept orders online, over the phone, or through the mail by their bank do not face this same liability for fraudulent transactions.

Another major drawback of keyed card transactions is the increased costs that can come with them. Fraud is easier with a manually keyed card transaction than it is with a card-present transaction completed by inserting or tapping a card or payment app.

That’s true for fraudsters making illegitimate cards using stolen information. It’s also a less secure approach for merchants internally. All it takes is one unscrupulous employee to copy down the details or otherwise steal that information. In cases where the details need to be written down, that creates a scenario where the information could be found and stolen later on.

Payment processors want to avoid risk and the potential for fraud. Of course, one of their foundational goals is to make money. So, card-not-present transactions generally cost more for merchants than card-present transactions.

In other words, the processor takes an additional risk by accepting these transactions. They account for that risk by charging merchants more to process a card-not-present payment.

Optimizing Payments With Swipesum

When card-not-present payments and keyed card transactions can be avoided, they should be. For businesses that rely on card-not-present transactions, the additional cost can be seen as an unavoidable part of operations.

No matter what industry your company operates in or how it accepts card payments, Swipesum is here to help. Our industry knowledge and expertise helps us:

• Find the best possible combination of tech, tools, and providers for your unique business needs.
• Support and guide your business as it integrates those new systems into your current structure and tools.
• Take the lead in negotiations, helping you reduce costs. Even if your company has to pay more for card-not-present transactions, there are many other opportunities to negotiate fees down or eliminate them completely.
• Monitor the health of your accounts going forward.

Ready to transform your approach to card payments for the better? Schedule a free consultation today!