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Key V/s Swiped Transactions- A Deciding Factor for Merchants

By October 29, 2013April 7th, 2022No Comments3 min read

It is favorable for a merchant to boost sales by accepting credit cards for processing transactions. However, it is also essential for merchants to understand that if used inappropriately, credit cards may rip off profits. Merchants should clearly understand the reasonable use of key and swipe transactions by considering some essential factors.

Risk Level

The fee charged for a credit card depends on the risk level of a transaction. The swipe transaction involves less risk as the consumer is present while swiping the credit card on the processing machine. A keyed transaction on the other hand is prone to a higher risk as the card holder or the credit card is not present during the transaction. This makes it prone to errors which are difficult to rectify. In case of a mishap a merchant needs to pay more for keyed transactions as compared to the credit card swipe.

The Qualified Rate

Keyed transactions are processed at a higher rate otherwise known as a non-qualified rate. For instance, while processing a key transaction if the machine rejects to verify the card holders’ address or other required information, the merchant is charged with a non-qualified rate. Also if the merchant does not settle keyed transactions within 24 hours he/she is liable to greater risks of paying a higher fee. A swipe transaction takes place immediately on the credit card processing machines and the merchant need not bother much about verification or errors as the procedure is automatic and thus there are lesser chances of making mistakes.

Business Type

Cutting redundant costs is essential for the merchant but this depends on the business type also. Mobile payments for instance are a great alternative for small business type such as plumbing. Plumbers can note down credit card numbers and later conduct hand-keyed transactions. This facilitates working and accepting payments at the same time. Another way to use keyed transaction is to note down credit card number followed by a keyed transaction on the office premise. Money can be easily obtained using the ATM merchant services specially designed for businessperson.

Swipe transactions are swiped on-site and this eliminates the hassle of noting down card numbers which the merchant might forget to enter. Swiping a credit card is cheaper than the keyed transaction as the former process is prone to less chances of errors and is convenient to use to quickly process transactions.

It is essential for any merchant to estimate the pro’s and con’s of keyed and swiped transactions and reasonably decide a suitable option for the business type. A merchant in all case should consider an option which benefits the business and prevents any risk which may lead to losses.

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