Keyed-in Transaction Definition

Have you ever typed a customer’s card number over the phone? Or keyed in information in your point-of-sale system because the chip wouldn’t read? That’s what’s known as a keyed transaction — a payment made when the details of the card are entered manually, rather than swiped, tapped or inserted. This method is useful for some situations but charges you the higher processing fees and puts you at risk of even more fraud.

With today’s shifting landscape of payments, looking at an explanation of how a keyed-in transaction works is more than just a nice-to-know, it’s a must-have. From distant orders to fail-safe payment options when contactless fails, these transactions appear a lot more frequently than most businesses would ever think. But convenience can have a price, if you’re not careful.

This post will define what keyed-in transactions are and other important details. Let us start.

Keyed-In Transaction: Basic Definition

A keyed-in transaction is a payment made by a merchant who types a customer’s credit or debit card number into a cash register or virtual terminal, as opposed to physically swiping, inserting, or tapping the card. This is usually the case when the card is not physically present — for a phone order, say — or if the card reader is unable to read the chip or magnetic stripe.

During a keyed-in transaction, the merchant is required to enter certain pieces of information including the card number, expiration date and CVV security code, and sometimes the ZIP or postal code for billing purposes. Because this process bypasses the security of actually checking the card or the cardholder, it is riskier from the perspective of payment networks, and it tends to command higher processing fees by the payment processors.

A keyed-in transaction does not have the encryption and verification that swipe, insert, or tap-to-pay transactions (also known as card-present transactions) enjoy. While it does offer flexibility — particularly in a remote sales environment — it also can invite fraud and chargebacks if not properly executed. That’s why businesses should be strategic about when to use keyed-in payments and never compromise on security when they are manually entering card details.

Common Situations Where Keyed-In Transactions Are Used

Although it is the least safe form of transaction, keyed-in transactions are still used frequently across all industries. They provide a flexible option when the traditional card-present methods are not practical, don’t make sense.

One common scenario that a keyed-in transaction is used is when taking phone orders. Whether its a customer making a takeaway order or a B2B buyer ordering more supplies, businesses frequently handle card details over the phone to process a sale. Likewise, a few mail-order services are still entering card details manually — particularly businesses serving niche or older demographics.

In the world of e-commerce, keyed-in transactions can serve as a backup. In case a digital wallet or a saved card did not work, customers could manually enter the card details to complete the checkout.

Manual entry is also an option for pop-up shops and mobile sellers like artists or food trucks if the card readers are down or not available. The same applies to trades people such as locksmiths, mobile mechanics, and tow-truck drivers, who frequently need to take payments on the go where a swipe or tap may not be available.

These scenarios demonstrate the value of a keyed-in transaction, but this is a reminder to use added caution. The more often a card isn’t there, the higher the potential for fraud — and the expenses that come with it.

Fees and Processing Costs for Keyed-In Transactions

When it comes to payment processing, keyed-in transactions are the most expensive. Why? Because they take more risk of fraud. Without a physical card, the card data is stolen. To compensate, card networks apply high interchange rates – usually between 2.5% and 3.5%, and sometimes more.

In comparison, card-present methods like chip insertions or contactless tap typically attract lower fees, often between 1.5% and 2.7%. This difference fastens rapidly, especially for recurring or high-ticket transactions.

Payment processors such as Authorize.net, Stripe and Square reflect this risk in their pricing. For example, the Stripe manually charges an additional fee for the payment recorded. These platforms also build in risk management protocols, but even then,a keyed-in transaction is more prone to chargebacks.

Beyond surface fees, there are also hidden costs. Manually recorded payment expose merchants to more fraud liability, causing potential disputes, refunds, and reputed damage. The chargeback rates are high, and some industries also face payment holds or account suspension if their risk levels increase.

In short, while a keyed-in transaction offers flexibility, especially in immediate or distance scenarios, they come with a financial trade off. Businesses need to weigh the convenience against the costs.

Fraud Risks Associated with Keyed-In Transaction

In 2025, card-not-present fraud is still ongoing and keyed transactions are at the heart of it. Without a chip, a tap or swiping involved, verification becomes weaker — and these transactions are more susceptible to fraud.

Fraudsters often use stolen card data to make purchases over the phone or online, where manual entry is required. Because there’s no physical proof of the cardholder’s presence, businesses bear the brunt of responsibility in disputes. If a customer claims they never authorised a keyed-in transaction, the burden of proof falls entirely on the merchant.

Chargebacks are a big concern. Without proper fraud controls, a merchant could not only lose the payment, but also the product or service that they delivered. PCI compliance also is key here. The risk of data theft also goes up if card numbers are written down on a paper pad or input manually in an unsecure system.

To reduce fraud, it’s essential to collect more than just the card number. Requiring the CVV code and using Address Verification Systems (AVS) can significantly lower risk. Many modern payment processors also offer real-time fraud filters to flag suspicious activity.

Keyed-in transactions can be flexible, but businesses need to have robust security measures in place to avoid fraud and ensure customer confidence.

Should Your Business Accept Keyed-In Transactions?

Whether you should accept keyed transactions is a decision you should make based on your business model, your customers’ payment habits and what you are willing to risk. On the positive side, this form of payment enables flexibility, which gives businesses the option of being able to complete sales even when a card is not present. It can be a handy backup in the event that an NFC or chip transaction won’t go through, particularly in industries that require field service, emergency repairs or over-the-phone sales.

Yet keyed-in transactions carry obvious disadvantages. They come with higher processing costs than swiped or chip payments, and they are more vulnerable to fraud and chargebacks. The processing is also usually slower, and you may need to go through further verification.

For bricks-and-mortar or other in-person businesses, you have little excuse for using keyed-in payments. But if you operate a business on the go, deliver goods or accept bookings remotely, it can serve as a useful option — as long as it’s not your go-to payment method.

Whether you should accept keyed transactions is a decision you should make based on your business model, your customers’ payment habits and what you are willing to risk. On the positive side, this form of payment enables flexibility, which gives businesses the option of being able to complete sales even when a card is not present. It can be a handy backup in the event that an NFC or chip transaction won’t go through, particularly in industries that require field service, emergency repairs or over-the-phone sales.

To strike a balance, use the keyed-in transaction only when absolutely necessary. Consider safer alternatives like secure payment links, QR code invoicing, or mobile wallet options like Apple Pay and Google Pay. These tools give customers more convenience while protecting your business from risk.

Ultimately, the decision isn’t about whether to accept manual entries at all—but how to do so wisely, with proper safeguards in place.

How to Reduce Keyed-In Transactions in Your Business?

A keyed-in transaction has its place but reducing them when you can will help your business, its bottom line, and protect against fraud. Begin by encouraging customers toward card-present options, like chip insert or tap-to-pay — which are more secure and typically have better rates.

Teach your staff to ask customers use contactless payment options such as Apple Pay, Google Pay or PayPal. Mobile card readers from companies like Square, SumUp or Clover can be a game-changer for businesses on the go.

If payments are remote, don’t take card details over the phone. Instead, send e-invoices with secure payment links — this keeps card data safe but also offers an improved experience to those you are billing.

Finally, redesign your checkout flows (both online and offline) to ensure that digital, secure options are the default. This provides a more seamless and secure payment experience with reduced key-entered transactions.

Conclusion

A keyed-in transaction may seem an easy solution to getting paid when no card is present — but it comes at a price. Higher fees, risk of fraud and compliance demands make it a less than ideal default option.

That said, keyed-in transactions do still have a place, especially for service-based and remote businesses. The trick is knowing where and how to use them. Each one is another opportunity for a fraudster to get by your security, so log all data that you find suspicious and train staff on what to turn away.

Now’s a good time to review your current payment workflows. Are you relying too much on manual entry? Can you use more secure alternatives, like tap-to-pay or digital wallets? With a couple of smart moves, however, you can decrease the risk, cut down on processing costs, and provide your customers with a simpler, safer way to make a payment.

Frequently Asked Questions

1. Is a keyed-in transaction the same as a card-not-present transaction?

Not exactly. All keyed-in transactions are card-not-present, but not all card-not-present transactions are keyed-in. For example, recurring billing or Apple Pay also fall under card-not-present but aren’t manually entered.

2. Why are keyed-in transactions more expensive?

They carry higher fraud risk due to lack of chip or tap verification. Payment processors charge more to offset potential losses.

3. Can I avoid keyed-in transactions completely?

Yes, especially in retail or digital-first setups. But if your business accepts phone orders or operates remotely, you may need to use them occasionally.

4. Do I need to be PCI compliant if I process keyed-in payments?

Yes. Even occasional manual entry requires PCI DSS compliance. That includes secure terminals and data handling practices.

5. What’s the safest way to handle keyed-in transactions?

Use encrypted payment terminals, require billing zip codes and CVV, never write down card details, and keep systems up to date with the latest security protocols.