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Keyed-in purchases, which usually cost as much as card-not-present transactions, especially in the U.S., are substantially more expensive than card-present purchases, says Todd Ablowitz, president of Centennial, Colo.-based Double Diamond Group LLC.

Depending on the acquirer, card-not-present transactions are at least 30 basis points higher than card-present transactions, and many merchants typically will not accept card-not-present transactions because of the expense, Ablowitz explains.

For small U.S.-based merchants, the interchange applied to keyed-in and card-not-present transactions initiated with a MasterCard credit card is 1.89% of the sale plus 10 cents, which compares with 1.58% plus 10 cents for card-present transactions, Ablowitz says. That means for a $100 purchase, the interchange fee for a keyed-in transaction would be $1.99, 31 cents more than the $1.68 fee for a card-present transaction.

Payments Source, February 24, 2011