Face to Face

Face-to-face credit card transactions occur when the card holder is present at a retail establishment and uses his credit card to complete a purchase. Face-to-face transactions are the easiest, simplest, most secure transactions for both the merchant and the card holder. Statistics show that face-to-face transactions are 50% less likely to be charged back or fraudulent.

In a face-to-face transaction, the merchant rings up the sale and then requests the credit card from the customer. At this time the card is proffered and the merchant swipes it through his terminal, keying in the amount of the purchase, if necessary. While waiting the few seconds for the transaction to be approved, the merchant then requests identification from the customer in the form of some sort of photo ID.

It is very difficult for the customer to claim he didn’t make the purchase if he produced the card, offered his identification and then signed the receipt. Unless his card and identification were stolen and then used by someone to get away with the scam, the transaction is assumed by all parties to be an honest one.

Overall fees charged to the merchant for processing face-to-face transactions are less than fees charged for credit card transactions where the cardholder is not present. This is because the rate of fraud in face-to-face transactions is much lower than in “cardholder not present” ones.

Skimming operations, where criminals obtain the information surreptitiously from the magnetic strip on the credit cards, result in counterfeited cards bearing the victims’ information. To use a counterfeit card in a face-to-face transaction the criminal now must fabricate some sort of official-looking government photo ID with the name and photo of the cardholder on it, or the merchant will not accept it. So the counterfeiting process is twice as difficult, which is precisely what makes it more difficult to use the stolen information fraudulently.

Skimmers generally take the misappropriated information and use it to make online or telephone purchases, generally to a third-party shipping address. And while that type of fraudulent transaction is getting more difficult these days with more advanced security technologies, it is still far easier than face-to-face transactions.

Merchants who deal primarily with face-to-face transactions operate in a climate of less risk and lower security costs. However, as security technology advances, online merchants and others who rely on “cardholder not present” transactions are attaining higher levels of successful transactions. As this success increases and the cost of fraudulent credit card transactions decreases, the costs for all types of credit card transactions should stabilize.