Understanding Keyed Transactions With Signature Payments

Dec 4, 2023 | Payments

Two primary transaction types exist when handling credit card information: swiped and keyed transactions. While swiped transactions are a more prevalent form of credit card transactions, keyed in transactions play a crucial role in the payment process. In this article, Signature Payments explores keyed transactions’ intricacies, purpose, functionality, and significance.

What Are Keyed Transactions?<br />
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What Are Keyed Transactions?

Keyed transactions involve manually keyed credit or debit card numbers into a payment terminal or online commerce platform. You must use this method if the card’s magnetic stripe is damaged or unreadable.

People commonly use this approach for online, phone, and mail purchases. In contrast, swiped transactions involve physically sliding the card through a reader at a business’s physical location.

How Do Keyed Transactions Work?

The process of a keyed transaction is straightforward:

  1. The customer provides their debit or credit card payment information to the merchant.
  2. The merchant enters the card information into their credit card terminal or virtual platform.
  3. The payment terminal or virtual platform sends the card information to the payment processor.
  4. The payment processor verifies the card information and sends it to the card issuer.
  5. The card issuer approves or declines the transaction.
  6. The payment processor sends the approval or decline message back to the merchant.
  7. The merchant informs the customer of the transaction status.

Why Are Keyed Transactions Important?

Keyed transactions hold significance for several reasons:

  • Convenience: Keyed transactions enable customers to make online or phone purchases without physically swiping their cards.
  • Accessibility: Merchants can accept payments even when customers don’t have their physical cards.
  • Flexibility: Keyed transactions provide an alternative for customers with damaged or unreadable cards.
  • Security: Manually entering card information enhances security, preventing fraud and protecting against stolen or fake cards.


Understanding Qualified Keyed Transactions for Beginners

Understanding qualified keyed transactions is crucial for processing payments through your merchant account. These transactions adhere to specific criteria set by major card networks like Visa and Mastercard. To accept payment, you need to consider the card type, processing method, and business type.

Understanding Qualified Keyed Transactions for Beginners<br />

Delving into the Specifics

  1. Card Type: The type of card used plays a significant role in determining whether a transaction is qualified. Different card networks may have specific requirements for classifying transactions as qualified.
  2. Processing Method: Transactions can be processed in two primary ways—swiped or keyed. Swiped transactions involve physically swiping the customer’s card, while keyed transactions require manually entering the card details. Understanding the distinction between these methods is vital for merchants aiming to optimize all potential sales.
  3. Business Type: The nature of your business also factors into the qualification of transactions. The products or services businesses offer may be classified differently, influencing the qualification criteria.

To improve your business’s financial health, learn the rules set by card networks and enhance how you process transactions. This will help you understand and leverage qualified transactions to your advantage.

Exploring Mid-Qualified Transactions

Mid-qualified transactions represent a category that falls short of meeting all the criteria for a qualified transaction. The factors determining qualification include the card type, processing method, and the nature of the business accepting the payment.

A Closer Look at Key Aspects

  1. Card Type: The type of card used in a transaction decides whether it is mid-qualified. Variations in card types across different networks may impact the transaction’s classification.
  2. Processing Method: The method employed to process a transaction—whether through swiping or keying—can influence its qualification status. Understanding the nuances of these processing methods is essential for merchants seeking to optimize their transaction outcomes.
  3. Business Type: The nature of the business accepting the payment is another critical factor. Specific industries or business models may classify transactions as mid-qualified based on their products or services.

In contrast to qualified transactions, mid-qualified transactions incur higher processing fees. This makes them a less favorable option for merchants aiming to manage costs efficiently.


Keyed Transactions vs. Swiped Transactions:<br />

Non-Qualified Transactions

Non-qualified transactions do not meet the criteria for either qualified or mid-qualified transactions. Different factors can lead to this, such as the card type, processing method, and the type of business accepting the payment.

Merchants tend to avoid non-qualified transactions because of their high fees.

How to Minimize Non-Qualified Transactions

Merchants can incur high processing fees because of non-qualified transactions. Here are some tips for minimizing them:

  • Use the correct transactional keywords.
  • Verify card information to prevent errors.
  • Educate employees on proper transaction processing.
  • Use an address verification service (AVS).
  • Use a card verification value (CVV).

Keyed Transactions vs. Swiped Transactions

While both keyed and swiped transactions process payments, they differ significantly. Here are the main differences:

  • Card Present vs. Card Not Present: Swiped transactions occur when the card is physically present, while keyed transactions occur when the card is not present.
  • Processing Fees: Swiped transactions typically have lower processing fees than keyed transactions.
  • Security: Swiped transactions are generally considered more secure, as the card is physically present and can be verified by the merchant.
  • Speed: Swiped transactions are usually faster, as the card reader automatically reads the card information.

Conclusion

Keyed transactions are crucial for customers to securely make purchases when they don’t have their cards or when shopping online. Merchants can enhance the payment process by understanding keywords and minimizing non-qualified transactions, saving time and money.