Credit card processing is a fairly complex topic, particularly since there are a lot of different ways to take a customer’s credit card information.
You can process credit card transactions online via your eCommerce store, in person, and over the phone.
Even in person, there’s more than one way to take the card. A customer can swipe, tap, or dip their card. They can even use a mobile wallet stored in their smartwatch. And of course, a service provider or accounts payable representative can always manually key in a transaction—which is what we’ll focus on today.
Keyed in transactions happen when you enter the credit card information manually into your credit card terminal or point of sale (POS) system. This is in contrast to swiped, dipped, or tapped methods, which can capture payment data when the card makes contact with the payment device.
How to Run a Keyed in Credit Card Transaction
Running keyed in transactions includes more work for your salesperson than other methods of credit card transactions, but it’s still quite easy. Exactly how the process goes will depend upon the particular software you are using. That said, the general steps are:
- First, your salesperson will usually take the customer’s credit card to read. If they don’t take the card, they’ll have to collect the card information from the customer, as is the case when payments are made over the phone.
- Next, they’ll select the manual option in your POS or payment processing software.
- From there, the software will give them space to physically type the card number, along with the expiration date, and frequently the CVV security code. Depending on certain card data requirements, you may also be required to enter the zip code or full billing address associated with the card.
- After that, the salesperson will have to move on to the next step as directed by the software. Often this step is running the transaction.
Finally, the payment system tokenizes the card information and forwards the data along to the bank to verify, then authorize the transaction. Once it’s authorized, the bank will disburse the funds to your merchant account and you can conclude the transaction.
Why Do You Run Keyed In Transactions?
Keyed transactions happen for all sorts of reasons, the most typical of which is that your customer’s card isn’t swiping, dipping, or tapping correctly, so manual entry is the remaining option.
This is especially common for customers with older or well-loved cards.
The other reason you’ll run manual transactions is that you can’t swipe the card in real-time for technical or practical reasons. Some of these scenarios include:
- When you have to take a sale over the phone. In this case, a customer will read you the card information that you then manually input.
- You have salespeople or field service technicians who are equipped with a terminal and key in card information in order to collect payment and complete the transaction on site as soon as service is done.
- You take written orders from customers and require they share their card information on the order.
- You send out paper invoices and attach a payment form that customers can fill out and send back to you. This is a common case with many medical bills.
The Pros of Keyed in Transactions
Keyed transactions can be really useful for merchants, for two main reasons:
- They provide you with the means to collect payments in the event that methods like swiping are not an option. Overall, keyed in payments can be part of a well-rounded system that gives you the flexibility to accept all forms of payments.
- And they provide the customer with the convenience of getting their item easily, rather than having to run home for a different payment form.
Ultimately, a keyed in transaction enables you to provide excellent customer service so it’s an important tool in your arsenal.
The Cons of Keyed Transactions vs Swipe Transactions
That said, there are a number of downsides to consider when it comes to keying in a transaction.
Higher credit card processing costs
The biggest con is that keyed in transactions generally come with higher credit card processing fees than swiped transactions. They’re run as card-not-present transactions, which always increase the risk for fraudulence as scammers are able to make counterfeit credit cards that feature real card information. As the bank is taking on more risk than a card-present transaction, they charge the seller higher fees to compensate.
Increased data security and liability risks
Manual transactions also increase your own liability in a few ways because it’s the least secure way to run a payment.
- First, if it’s a fraudulent transaction, the bank shifts liability back onto the merchant for keyed in transactions. So you’ll be responsible for all the fees for a chargeback. (As a note, if you aren’t using updated hardware that’s EMV-compliant, you’ll face this level of liability now with all transactions.)
- Second, it’s very easy for one of your employees to steal card information when they have such prolonged access to the card data especially if they’re writing the card information down.
- Third, in the case of written card information, even with the most trustworthy employees around, if you don’t dispose of it correctly (shredding, for instance), anyone else can still get their hands on your customer’s card information now.
How to Reduce the Number of Keyed in Transactions in your Business
You likely won’t be able to rid your business of manually entered transactions entirely. Technology will fail at some point.
That said, there are a number of ways you can reduce the amount of keyed in transactions that occur at your store.
Train staff to request a secondary payment method for credit card payments rather than automatically switching to manual entry. Be sure to teach them methods of requesting that don’t fault the customer, so your staff isn’t inadvertently causing embarrassment. A good phrase is along the lines of, “Looks like our machine just doesn’t want to work with that card. Any chance you’ve got another we could try swiping?”
Utilize a virtual terminal when a customer places an order over the phone. Generally, this means you’ll send the customer a billing page or invoice online through your payment processor for them to enter the information. (Want to learn more? Here’s a complete guide to online invoicing.)
Regularly update all your credit card terminal hardware. If you’re finding that your customers’ cards commonly aren’t reading, the issue may well lie with your hardware rather than their cards.
Provide workers who go out in the field with a mobile POS, card reader, or payment app. While mobile card readers are quite cheap these days, if that’s out of budget you can use a solution like the Stax Pay mobile app, which lets users securely capture payment data without the need for extra hardware.
How to Lower Your Payment Processing Fees
If keeping your payment processing fees low is the ultimate goal, consider switching to Stax. Our subscription service plus 0% markup on direct-cost interchange fees includes keyed in transactions—so you actually don’t pay more when you have to manually enter a transaction!
Don’t cripple your business with credit card processing fees. Leverage Stax’s subscription-based pricing and improve your bottom line. Contact us to learn more.
FAQs about Keyed In Transactions
Q: What is a keyed in transaction?
A keyed in transaction occurs when you manually enter a customer’s credit card information into your credit card terminal or Point of Sale (POS) system. This is the alternative to swiped, dipped, or tapped methods, which capture payment data when the card makes contact with the payment device.
Q: How do you run a keyed in credit card transaction?
To run a keyed in transaction, you first collect the customer’s credit card information, then select the manual option in your POS or payment processing software. You enter the card number, expiration date, CVV security code, and possibly the zip code or billing address associated with the card. The salesperson then completes the transaction as directed by the software. The payment system then tokenizes the card information and forwards the data to the bank for verification and authorization.
Q: Why are keyed in transactions necessary?
Keyed in transactions are necessary when a customer’s card isn’t swiping, dipping, or tapping correctly and manual entry is the remaining option. This might occur with older or well-used cards. Keyed transactions also occur when you can’t swipe the card in real-time for technical or practical reasons, such as over-the-phone sales, field service transactions, written orders, or paper invoices.
Q: What are the pros of keyed in transactions?
The advantages of keyed in transactions include the ability to collect payments when other methods aren’t available and the convenience they offer to customers. They are part of a well-rounded system that accepts all forms of payments and can help provide excellent customer service.
Q: What are the cons of keyed transactions vs swipe transactions?
Keyed in transactions typically involve higher credit card processing fees and increased data security and liability risks. They are processed as card-not-present transactions, which increase the risk for fraudulence, hence the higher fees. Moreover, liability shifts back onto the merchant for keyed transactions, meaning you’ll be responsible for all the fees for a chargeback.
Q: How can the number of keyed transactions be reduced in a business?
To reduce the number of keyed in transactions, you can train staff to request a secondary payment method first or use a virtual terminal for phone orders. Regularly updating your credit card terminal hardware can also help, as can equipping field workers with mobile POS or payment apps.
Q: How can payment processing fees be lowered?
To lower your payment processing fees, consider switching to a service like Stax that offers subscription-based pricing and doesn’t charge more for manually entered transactions.
Q: What are the security measures taken during keyed in transactions?
During a keyed in transaction, the payment system tokenizes the card information, which means it converts sensitive data into non-sensitive data, known as tokens, to ensure data security. The system then sends this information to the bank for verification and authorization.
