Card Not Present: A Detailed Guide onCNP Transactions

Being a business owner, you need to provide your customers with different ways to process transactions to succeed. Having multiple payment options has become a trend. When it comes to making payments, people want options, and you need to meet their specific requirements to lower friction in the purchasing process.

In this advanced digital world, customers can make purchases even without having a payment form in their hands. Wondering how? Processing a payment without being physically present is known as a CNP (Card Not Present) transaction.

Whether you have already heard about CNP or are hearing it for the first time, this post is a detailed guide on Card Not Present transactions, including basics and why it matters. For more details, let’s have a quick look.

What is a Card-Not-Present Transaction?

CNP transactions occur when neither the credit card nor the cardholder is physically present during a transaction. It is common among remote orders. That means any transaction that facilitates online, through fax, or over the phone is considered card-not-present.

Examples of CNP Transactions

Knowingly and unknowingly, you probably come across several CNP transactions every day. These transactions include:

  • Phone Orders: When a client gives his credit card details over the phone to your business.
  • Online Purchases: When a consumer purchases goods or services online through an online transaction.
  • Invoices: Transactions that are paid digitally.
  • Recurring Payments: Payments that are set up to bill automatically.

Cost of CNP Transactions

Interchange costs are not the same; they vary slightly from one card to another among multiple card types. Usually, interchange expenses for card-not-present transactions are relatively higher than card-present payments. The reason behind this is the improved rate of risk. When it comes to card-present transactions, there’s a certain confidence level that comes with using a card physically. Therefore, the interchange costs for card-present payments are lower.

The surprising part is that many vendors are paying these higher interchange expenses without even having an idea about them. If you’re physically taking cards from your clients and then entering the card details manually into a mobile device or terminal, that means you are paying card-not-present interchange costs.

To avoid this, consider investing in a mobile card reader device. It will enable you to process transactions automatically by merely swiping the card instead of manually typing the card information.

CNP Frauds and How to Prevent Them

CNP transaction frauds are a type of credit or debit card scam in which fraudsters use the compromised card details of someone else to make a remote purchase. As both the cardholder and card are not physically present, it is challenging for vendors to verify the buyer’s identity. A 2020 True Cost of Fraud Study by LexisNexis shows that every $1 of fraud costs around $3.36 to eCommerce merchants and US retailers per transaction. Therefore, it’s essential to take the necessary steps to eliminate credit/debit card fraud, especially with card-not-present transactions.

When it comes to detecting and stopping CNP frauds, there are two best methods for authenticating online transactions, including:

  • Negative lists – also called blacklists.
  • CVV or CVN numbers – the 3 or 4 digits number on the card back.

Apart from this, AVS (Address Verification System) is also an effective method to verify the address of an individual who claims to own the credit card. This system allows merchants to check the billing address of a credit/debit card given by a consumer while processing a payment. This can help you lower the risk of payment fraud.

Ways You Can Accept Card-Not-Present Transactions

Though card-not-present transactions sound a little scary, most business models need to incorporate CNP to be successful. There are multiple ways to accept CNP transactions securely, including:

  • Online Invoices: Businesses can send invoices to their customers to receive payments on their services. Online invoices are automatic billing methods that help you to get paid faster.
  • Payments API: Under this, you can accept payments using your application. You can create a payment API that allows you to receive your business payments quickly without any hassle.

Risks Involved with CNP Transactions

As mentioned above, the risk level for CNP transactions is much higher than for card-present transactions. This is because card-not-present transactions need significantly fewer hard proofs – leading to fraud.

When a purchase is conducted through the card-present method, the vendor can verify all transactions personally. They can compare the actual credit or debit card against a customer’s driving license, ask for the PIN, or compare the signature on the license with the one he mentions at checkout. In contrast, merchant processing CNP transactions do not have the same opportunity to verify buyers’ identities – opening doors to fraud.

In this digital age, frauds are growing at an incredible pace, not just for customers, but for merchants or vendors as well. Though you can’t prevent them all, there are steps that you may follow to mitigate the risk of CNP chargebacks. For more details on this, consider taking the help of a professional.

Processing CNP Transactions Wisely

One of the essential things you can do to protect your business and yourself from fraud is to optimize and process your card-not-present transactions wisely. For this, you need to collect sufficient information about your customers, such as

  • Email address
  • Contact details
  • Shipping address
  • Billing address

Being a merchant, you also need to ensure you have all the critical credit or debit card details in your hands or records to conduct transactions properly. This information includes:

  • Name (one that is on the card)
  • Credit card number
  • CVV security number
  • Expiration date

While all these details play an essential role in ensuring secure transactions, the security code adds a protection layer for your company to accept card-not-present transactions. Cross-checking this information while processing transactions can mitigate the risk of CNP fraud to some extent.


In today’s marketplace, card-not-present transactions have become a top priority for clients to submit their payments. Therefore, it has become critical to have a payment processing system that offers secure, hassle-free methods to accept those CNP payments to successfully run your business. But, remember to take some precautions to lower the risk of CNP fraud. You may also consider taking help from a professional.

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