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What Are Card Not Present (CNP) Transactions and Why Do They Matter?

CNP transactions are those that do not require the physical interaction of a card with a payment terminal. Often referred to as "card-not-present" or "internet" transactions, CNP transactions include ecommerce and telephone sales. They also include all other internet-based payment forms, which have notably grown significantly in recent years.
Businesses are now able to process huge numbers of transactions remotely, without the need for physical contact with the card itself. The convenience this affords merchants is obvious, but there are additional, more subtle benefits that can be cited as incentives to accepting CNP payments. These benefits have to do with the ways that Card Not Present transactions are processed and secured.
CNP payments offer merchants a number of advantages over traditional card-present payments. For one, they reduce the chances of fraud, as no physical card is ever present at the point of sale. This is especially valuable for businesses that sell products or services online, as there is no face-to-face interaction with the customer and no opportunity for the card to be stolen or copied.
Additionally, CNP payments are typically processed more quickly than card-present payments. This is because there is no need to wait for the physical card to be returned from the customer, which can often take several days. This also eliminates the possibility of a delay in shipping due to an incorrect or incomplete address.
Another advantage of CNP payments is that they often result in lower processing fees. This is because card-present transactions involve additional security measures, such as the use of a physical card and PIN, that are not necessary for CNP transactions.
These benefits of CNP transactions have resulted in a steady increase in the number of businesses that accept this form of payment. In 2012, only 40% of US retailers offered CNP options to their customers; today, more than 60% do so. As awareness and adoption of such payments continue to grow, merchants will find themselves facing increased competition for CNP transactions, making it more critical than ever to implement best practices for their processing.
The following guidelines are designed to help merchants make the most out of this developing market:

  • Choose the Right Software Provider - The form of payment processing you use is only as good as the software that supports it. When choosing a provider, make sure to select one that will be able to meet your unique needs, whether you are trying to scale an existing business or are just starting out.
  • Create Mobile - Friendly Payment Pages. CNP transactions often take place on mobile devices, which have smaller screens than traditional computers. It is critical that your payment processing pages are optimized for mobile devices, or you will lose potential sales.
  • Use Secure Socket Layer (SSL) Encryption - This is the standard security technology used to protect online transactions. Make sure your provider offers SSL encryption, and that it is enabled by default on all of your payment pages.
  • Accept a Variety of Payment Methods - In addition to traditional credit and debit cards, be sure to offer other secure payment methods to your customers. These could include online wallets such as PayPal and Google Wallet, or the use of one-time payment tokens.
  • Use 1-800 Numbers for Phone Orders - In addition to being a useful tool for building customer trust, 1-800 numbers result in faster transaction speeds than those processed over the phone.
  • Offer Same-Day Shipping - Same day shipping is becoming an increasingly popular option for online shoppers, as it can provide a competitive advantage in certain markets such as ecommerce and retail. Make sure your providers offers same day shipping to be able to meet this demand.
  • Don't Underestimate Mobile Fraud - Despite the security advantages of CNP payments, mobile fraud is on the rise. Be sure to have systems in place to detect and prevent fraudulent transactions, whether they originate from a computer or a mobile device.

By following these tips, merchants can ensure that they are taking advantage of all the benefits that CNP payments have to offer. In doing so, they will be well positioned to grow their business in this rapidly expanding market.