Why do Keyed Transactions Cost More than Swiped Transactions?

If you’re looking to accept mobile payments, GoPayment is your best option: it’s simple to set up and even easier to use. Once you sign up for a GoPayment account and install the software on your tablet computer, smartphone, or other mobile device, you can immediately begin processing credit card transactions from customers.

Keying vs. Swiping

Initially, you will have to manually key in credit card numbers in order to complete these transactions (keying). But within a few days you will receive a special credit card reader from GoPayment in the mail. You just plug this card reader into the audio jack of your phone or tablet and begin “swiping” credit cards through it to complete transactions.

If you look at the GoPayment pricing packages, you’ll notice that the “keyed rate” you pay per transaction is higher than the “swipe rate.” In other words, it costs you more to type in a credit card number manually than it does to swipe the card through the card reader.

Why is that?

Keyed Payments are Riskier

This is actually a standard practice with most credit card processors, not just those who handle mobile payments like GoPayment. The reason for the higher keyed rate is actually pretty simple: When a credit card number is keyed in manually, the actual card does not have to be present in order for the transaction to go through. Consequently, the rate of credit card fraud among these “card not present” transactions is significantly higher than those transactions where a card is actually swiped (because thieves tend to obtain credit card numbers more often than the actual cards themselves). Phone orders, where a crook is providing a credit card number by voice alone, are particularly dangerous.

The way that credit card processors guard against these potential losses is by charging a higher rate for keyed transactions. Since the processor doesn’t know whether you have the card in hand or not when you key in a credit card number, the rate is the same for all non-swiped transactions.

How do you minimize your expenses and your risk? The simple answer is, as a business owner, you should try to use the GoPayment card reader for as many credit card transactions as possible. If all of your transactions are conducted on a face-to-face basis, this should rarely (if ever) be an issue.


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