Keyed In Transaction

What Is A Keyed In Transaction?

A keyed-in transaction is a credit card payment that where a person manually types in the card information.

This is also known as a 'keyed' or 'manually entered' transaction. It’s used when the card can’t be swiped or chip-read, either because it isn’t physically present or for other reasons.

Keyed In Transaction Explained

One common reason for a transaction to be keyed in is that the card isn’t present. Card-not-present transactions include online shopping and mail and telephone orders. Keyed in transactions also occur in person. If a customer’s card, magnetic stripe, or chip are damaged, the card information can be manually keyed.

When a merchant swipes a customer’s card or the customer inserts it in a chip reader, it proves the card is present. Card-present transactions are considered safer. A keyed in transaction, on the other hand, is statistically more likely to be fraudulent. Thieves can use stolen credit card information to create counterfeit cards or to place orders online.

If a merchant can’t prove the customer’s card was present, they’re responsible for covering fraudulent transactions. That’s why if the card is present, the merchant should do their best to avoid keying in the information. If a card’s chip isn’t working properly, it can be a sign that the card is counterfeit.

Keyed transactions are also generally more expensive for merchants. All merchants pay interchange fees for processing credit and debit card transactions. There are a few factors that influence these fees, including the likelihood of a transaction being fraudulent. Since keyed transactions are riskier, they carry higher interchange rates.

For many businesses, the higher fees associated with keyed in transactions are just part of doing business. If you’re an eCommerce merchant, your customers’ cards won’t be present. You’ll want to account for slightly higher interchange rates in your budget. In many cases, though, there are some steps you can take to reduce your rates and avoid chargebacks.

Keep your credit card terminals clean. Any residue in the machine makes it harder for the terminal to read a chip or magnetic stripe.

If you’re keying transactions for invoices or recurring payments, have the customer fill out a credit card authorization form. A signed form isn’t a guarantee that you’ll win a dispute, but it will help your case.

Keyed In Transaction Examples

When you use your credit card to make a purchase with Amazon or another online store, that’s a keyed-in transaction. Instead of swiping or inserting your card in a terminal, you’re manually entering the information.

Have you ever been ready to buy something in a store, only to find that your card doesn’t work? Maybe your card’s chip was scratched or demagnetized. In this case, you’ll typically be prompted to try swiping your card. If that doesn’t work either, the cashier may key in the card information to their point-of-sale system. This is another example of a keyed-in transaction.

As a merchant, both of the above examples are common reasons to key in a transaction. However, you would still pay a bit extra in processing fees for these payments.

Here’s an example of how a keyed transaction can cause trouble for a merchant. If a cardholder disputes a transaction as fraudulent, the issuing bank will review the transaction records. Their goal is to determine the circumstances of the transaction to see who is liable.

For a chip-read transaction, in most cases, the bank is automatically liable, and the merchant is in the clear. For a key-entered payment, the merchant is usually liable. This means the merchant has to pay back the transaction amount to the customer.