CNP (Card Not Present)

Card Not Present refers to any transaction where the payment card is not physically present.
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What is Card Not Present?

Card Not Present refers to any transaction where the payment card is not physically present. This includes internet, phone, and mail order transactions.

Card Not Present Explained

Credit and debit card transactions can be separated into two categories: card present and card not present. With card-present transactions, the cardholder uses their physical card to complete the purchase. They typically insert, tap, or swipe the card so the terminal can read the chip or magnetic stripe.

With card-not-present (CNP) transactions, the card itself doesn’t interact directly with the merchant’s equipment. Instead, the cardholder provides their card information, including their account number. They may type this information into a website or read it over the phone.

Mail and telephone payments were originally referred to as MOTO transactions for Mail Order/Telephone Order. Today, MOTO is sometimes used to refer to all CNP transactions, including internet orders.

CNP transactions are statistically more likely to be fraudulent than face-to-face transactions. It’s easier for fraudsters to steal a credit card number than to create a convincing counterfeit card. Criminals use phishing, hacking and other methods to steal card information.

There’s also more chargeback protection for merchants with card-present transactions than with CNP. For a chip-read transaction, a merchant isn’t liable for a fraud chargeback as long as their equipment is up to date. But for a fraudulent CNP transaction, the merchant is likely to be liable for the loss.

There are several ways merchants can help protect themselves against fraud during CNP transactions. They include the following:

  • Use AVS (Address Verification Service) to ensure the customer’s address matches the address on file for the card
  • Require the customer to enter their CVV, which is the 3-digit security code on the card
  • Only ship to the verified cardholder address, or avoid shipping to PO boxes or international addresses

Because CNP transactions are riskier, credit card issuers and processors charge higher fees for them. These fees help offset some of the risks of processing these transactions.

Card Not Present Examples

In 2021, 230.5 million people are projected to shop online in the U.S. All of these shoppers are engaging in card-not-present transactions.

These days, phone and mail order purchases are less common, but they are examples of CNP transactions.

Using an app like Amazon, eBay, or Etsy to buy something on your phone is also a CNP purchase.

If you’re a merchant and take orders over the internet or via phone or mail, you’re engaging in CNP transactions.

There are a few different ways for merchants to process these transactions. You might have an online payment gateway and shopping cart. If so, your customers enter their own payment information. You can accept credit cards any time of day or night.

If you take orders over the phone, you might have a physical credit card terminal or a virtual terminal. A virtual terminal essentially lets you use your computer as a credit card machine. With either of these options, you gather your customers’ credit card information and enter it into your system.

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