SWIPE CARD PRESENT

All swipe or card-present transactions are executed at a POS terminal face-to-face. This environment provides a much more secure way for accepting card payments than a non-face-to-face setting. As a result, brick-and-mortar businesses typically suffer from less fraud and chargebacks and pay lower transaction fees than eCommerce and direct marketing merchants.

For swipe or card present transactions, the merchant and the shopper are in the same physical location. The merchant will have a card reader or swipe terminal and receipt printer at the point of purchase. The card reader device reads the magnetic stripe on the back of the card and transmits the encoded information to the processor, such as NDMS. Once a transaction is approved, the merchant can print a receipt or uses a signature capture device to obtain the cardholder’s signature.

On the back of every credit and debit card, is a magnetic stripe. The stripe contains the cardholder name, card account number and expiration date, as well as special security information designed to help detect counterfeit cards. When the stripe is swiped through the terminal, this information is electronically read and relayed to the card issuer, who then uses it as crucial input for the authorization decision.

Pricing

Swipe transactions clear at a lower Visa/MasterCard cost level. Any time that you swipe a card at the point-of-sale – whether it is using a physical terminal, PC software or even an Internet virtual terminal – that card will fall into lower cost categories than if you key in the same card over a terminal or PC system.

Keep in mind, however, that the way your merchant account is configured was also play a role. The only way to realize this cost savings from the lower cost on a swiped sale is to make sure that you have a merchant account configured to accept card present sales so that you will actually be billed for swipe sales.

If you do both Internet and retail/card present sales, the best thing to do is to setup two merchant accounts. You run the swiped sales through your card present merchant account and process the Internet payments online via your Internet merchant account, thus obtaining the best possible pricing for both.