Swiped vs. Online Credit Card Transactions: Why Do Online Deals Cost More?

interchange-plus transaction

Swiped vs. Online Credit Card Transactions: Why Do Online Deals Cost More?

You will notice when looking at your credit card processing costs that it costs more to process an online transaction than it does to swipe a card. Swiped retail transactions are considered safer to manage than online transactions you might handle through your website.

You will spend a few extra tenths of a percent of each transaction on keyed-in deals versus what you’d spend for swiped purchases. The value might not seem like much at the start, but it can become a problem in some situations.

What Costs Occur?

The average credit card processing fees for swiped transactions cost less than online ones regardless of the payment plan you utilize. For an interchange-plus transaction, you might notice the interchange fee is about 0.3 percent higher for an online transaction than for a swiped entry. Meanwhile, the additional mark-up could be 0.5 percent plus 25 cents for an online transaction versus 0.3 percent plus 8 cents for a swiped purchase.

For a flat-rate transaction, you might spend 2.7 percent plus 30 cents for a swiped transaction. But the value will rise to 2.9 percent plus 30 cents for online deals.

In general, you can expect to spend about 1.5 to 2.9 percent on swiped transactions versus 3.5 percent for keyed-in online entries. The change is a sign of the risk associated with online deals.

Why Are Online Fees Higher?

There are many reasons why the average credit card processing fees are higher for online keyed-in transactions:

  • An online transaction requires you to enter a customer’s CVV. The card value is necessary for cases where the physical card isn’t present. The added effort to review the card data adds to the risk.
  • There’s a potential the person buying something online isn’t the person that the card is attached to. The real people could be a victim of fraud. The person could potentially request a chargeback.
  • Some online networks may not be as well-encrypted as the ones a physical card network can use. Online card data may be lost in moments.
  • While a retailer should follow all PCI compliance standards when securing the card data it collects while online, there’s always the chance the retailer’s data may be stolen. The retailer must avoid listing the CVVs on cards in one’s records to reduce the risk of future card theft.
  • A physical card provides added security. The chip in a card can feature random numbers and codes that reset with each transaction. The feature makes it harder for people to steal card data. This point isn’t something you can find through an online transaction.

Be aware of the average credit card processing fees you will spend if you handle online transactions. In-person deals aren’t as risky as online ones. You’ll spend more on credit card processing costs if you facilitate more online deals. Look at how often you manage online payments versus in-person transactions, and factor those points into your budget over how you’ll cover the costs for those efforts.


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