You are here

What Are Card Not Present (CNP) Transactions?

Card-not-present (CNP) transactions are those that occur when the cardholder is not physically present to swipe or insert their card. This can happen in a number of different scenarios, such as online shopping, mail order purchases, and phone orders.
Since the card is not present, these transactions are considered to be higher risk than those that occur in person. As a result, merchants may be charged higher fees for processing CNP transactions. Additionally, they may be required to take extra steps to verify the customer's identity and prevent fraud.
There are a few different ways that merchants can process CNP transactions. The most common is through the use of a payment gateway, which allows customers to enter their credit card information on the merchant's website. Other methods include using a third-party processor or manually entering the information into a point-of-sale system.
Examples of Card Not Present Transactions
Below are a few examples of card-not-present transactions:

  • Online shopping: When you make a purchase from an online store, you are typically required to enter your credit card information into a payment form. This is considered a CNP transaction.
  • Mail order purchases: If you order something from a catalog or company that ships directly to you, you will usually have to provide your credit card number over the phone or through the mail. Since the card is not present when the transaction takes place, this is considered a CNP transaction.
  • Phone orders: If you make a purchase by phone, you will need to give your credit card information to the merchant verbally. This is considered a CNP transaction.
  • Recurring payments: If you have set up automatic payments for things like your gym membership or subscription service, these transactions will typically occur without your card being present. As a result, they are considered CNP transactions.

How to Reduce Fraud in Card Not Present Transactions?
Since CNP transactions are considered to be higher risk, it's important for merchants to take steps to reduce the chances of fraud. Some common methods of reducing fraud include:

  • Verifying the customer's identity: This can be done by requiring the customer to provide additional information such as their billing address or social security number.
  • Using AVS checks: AVS stands for Address Verification Service. This is a system that checks the customer's billing address against the one on file with the credit card issuer.
  • Checking for suspicious activity: If a customer's order seems out of the ordinary, it may be worth checking to see if there is any suspicious activity associated with their account.
  • Requiring a signature: For high-value transactions, you may want to require the customer to sign for their purchase. This can help to deter fraudsters who may not have access to the cardholder's signature.
  • Using tokenization: Tokenization is a process of replacing sensitive data with a unique identifier (or token). This can help to reduce the chances of credit card information being stolen in a data breach.

Card Not Present transactions can be risky for merchants, but there are a few steps you can take to reduce the chances of fraud. By verifying the customer's identity, using AVS checks, and checking for suspicious activity, you can help to protect your business.