The same card costs more when you can't see it.

Interchange prices in fraud risk

A card-present transaction — the physical card tapped, dipped, or swiped in front of you — carries lower interchange than a card-not-present transaction, where the customer's card details are entered online, over the phone, or on an invoice without the physical card being verified in person. This isn't processor markup; it's built into the published interchange schedule itself, because card-not-present transactions statistically carry meaningfully more fraud risk, and interchange pricing reflects that risk.

This is why a business that takes both walk-in and online orders will see two different effective rates for what looks like the 'same' sale — a $40 order paid in-store and a $40 order paid through your website are genuinely different risk categories to the card networks, even though the dollar amount and card are identical.

What this means for mixed-channel businesses

If you're comparing your processing costs against a typical rate range for your vertical, it's worth knowing what share of your volume is card-not-present, since that share pulls your blended effective rate up regardless of how good your underlying pricing is. A restaurant that added online ordering, or a service business that started taking phone deposits, will see their effective rate shift even with no change in their actual processor agreement.

Tokenization and address verification (AVS) can sometimes qualify card-not-present transactions for a slightly better rate tier by reducing fraud risk on the network's assessment — worth asking your processor whether these are properly enabled if you take a meaningful volume of online or phone payments.

Common questions