A Full Guide to Card Not Present Transactions

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(Newswire.net — January 7, 2022) — The internet has made our life easier in so many ways, and we make cards that are not present purchases all the time. But what is a card not present in the transaction? Basically, if you make a purchase online, and your card remains in your wallet, you have made a card not present purchase. And there are many pros and cons to this. As a consumer, it makes our life easier as nowadays our browser can autofill our details. But this can be part of the problem too. If transactions can occur without using the physical card, we open ourselves to fraud. And if a merchant does not physically see a credit card, it is harder to verify that the card belongs to the actual user. And with greater risk, comes higher costs. All card issuers have different rates depending on the payment method. The greater the risk, the higher the transaction fee.

What is a card-not-present transaction?

When we purchase something in a retail store and the merchant swipes our card, this is a card-present transaction. And this is the preferred payment method by banks. The use of EMV chips in cards makes it less likely that a card-present transaction is fraudulent. But when you close one door to criminals, they usually find another. And that is why they try to take advantage of card not present situations. 

Any business that will accept a card not present transaction, or CNP for short, must be aware of the extra risks. If a merchant receives a customer’s payment information online, rather than in person, then we have a CNP transaction. The CNP meaning in banking is that there is much more risk attached. And these transactions are the most common forms of payment nowadays. Online shopping is growing bigger and bigger. Why visit a retail store when you can purchase the item without leaving your home? You can read reviews of the products and you have immediate access to all of the product information. And you don’t even need your physical card.

The likelihood of fraud

We make many card not present purchases without even thinking about it, from phone orders to recurring payments. And while this makes life simple for us as a consumer, it increases the likelihood of fraud. If someone gets access to your card number, the expiration date, and the cvv number, they can make a purchase. And while many merchants take all the proper steps to verify the buyer, this is often not the case with small items. Our society has evolved into wanting ease of use in everything we do. Legitimate customers expect to use their credit cards without jumping through hoops. And this is why CNP fraud is a growing problem for merchants. 

Criminals can make payments over the phone, and then ask to collect the goods with a courier. Or they might ask for delivery to a PO box. Along with this greater chance of fraud, comes higher transaction rates. Interchange fees are higher for CNP transactions since there are so many cases of fraud. This extra cost means the merchant will often charge a higher price for the goods. And these extra charges mean a consumer will end up paying more.

Best practices to prevent fraudulent transactions

With a card-present transaction, the issuing bank is liable for any fraud. But when it comes to CNP transactions, the merchant may be liable. And this is why a business owner needs to take the proper steps to avoid fraud. But how does a merchant ensure that the correct user is using the card details? CNP fraud prevention requires common sense and proactive operation. Firstly, make sure you are compliant with all the basic security guidelines. This includes making sure the details are correct, the expiration date, and the CVV number. 

The next step is to allow shipment only to an address supplied by the cardholder. Do not allow delivery to any other location that is not specified by the card details. The address verification system allows you to check the address of the card owner. By asking the customer to verify the billing address, you can greatly reduce the chance of the card not presenting fraud. You would be wary if a stranger walked into your home. This is how you should approach a card not present transaction as a merchant. And all e-merchants should implement 3D secure authentication checks on their website.


Being able to make a card not present purchase is something that we sometimes take for granted. The convenience of CNP transactions makes our life easier. But we need to take the proper steps to try to eradicate CNP fraud. Merchants need to take more care in authenticating customers. As customers, we need to be aware that these extra checks need to happen. So the next time you’re asked to verify information, remember it’s for your own protection.