Interchange and Card Network Fees
Why does keyed entry increase interchange?
Keyed entry transactions often lead to higher interchange fees compared to swiped or chip card transactions. This increase occurs because keyed entries carry a higher risk of fraud and chargebacks for card networks and processors. Understanding why keyed entry increases interchange fees can help merchants manage their payment processing costs more effectively.
Why Keyed Entry Transactions Have Higher Interchange Fees
When a card is manually entered or "keyed in," the cardholder's information is typed directly into the payment terminal or online form rather than being read from the card's magnetic stripe or chip. This method lacks the security features of EMV chips or card swipes, making it more susceptible to fraudulent activities. As a result, card networks assign higher interchange rates to these transactions to offset the increased risk.
Factors Contributing to Increased Interchange for Keyed Entries
- Higher risk of fraud and chargebacks
- Lack of cardholder verification through chip or swipe
- Increased processing costs for card networks
- Greater liability placed on the merchant
Merchants can reduce the impact of higher interchange fees by encouraging customers to use chip or contactless payments whenever possible. Additionally, reviewing your merchant processing statements regularly can help identify when keyed entry fees are applied and explore ways to minimize them.
Using a tool like Merchant Statement Scanner allows you to analyze your processing fees in detail. You can even scan a PDF statement to quickly identify costly keyed entry transactions and better understand your interchange charges.
Next steps include reviewing your current payment acceptance methods, training staff to minimize keyed entries, and leveraging software solutions to monitor and optimize your interchange fees.
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