What are card-not-present transactions?
A card-not-present (CNP) transaction occurs when a credit cardholder and their credit card are not physically present when a payment is accepted. Most CNP transactions are tied to eCommerce, where the card and associated cardholder information is input into an online payment system. However, while much less common, transactions are also considered CNP when card information is accepted over the phone or via text or mail orders. In contrast, card-present (CP) transactions occur when a credit card is physically swiped, dipped, or tapped, during in-person purchases made at storefronts, offices, or events.
Software companies that embed payments into their platform — also known as integrated software vendors (ISVs) — can enable both card-present and card-not-present payment acceptance, depending on the needs of their user base.
3 key takeaways about card-not-present payments
- CNP transactions are now more common than CP transactions due to the increased availability of eCommerce platforms and ever-growing adoption of online shopping by consumers.
- Software companies that embed payments into their platform can offer both CNP and CP payment acceptance capabilities to their user base — the key is partnering with a payments provider that can address the needs of users with omnichannel solutions.
- CNP transactions are more vulnerable to fraud because businesses can’t verify a customer’s identity the same way they can with CP transactions. As a result, CNP transactions tend to have higher interchange rates. However, there are ways to optimize rates with the fraud detection strategies and solutions of a payments partner.
How software companies can offer card-not-present payment acceptance to their users
Software companies that partner with a payments provider like Worldpay for Platforms to embed payments into their platforms can offer both CP and CNP payment acceptance capabilities to their user base. If your users accept in-person payments at storefronts, offices, or other locations, they need CP acceptance methods like credit card terminals or point-of-sale (POS) systems. If your users conduct their business online or through an app, CNP payment acceptance methods like online shopping carts or hosted payment pages should be offered.
Learn more about Embedded Payments.
Examples of card-not-present transactions
A CNP transaction is processed when the credit card is not physically present at the time of the purchase, which typically includes these scenarios:
- Online purchases
- Text-to-pay purchases
- In-app purchases
- Subscription payments
- Over-the-phone purchases
- Mail order purchases
Card-not-present payments FAQ
What are the risks associated with accepting card-not-present payments?
Because a credit card and cardholder are not physically present during CNP transactions, it’s more difficult to verify the identity of the cardholder. This increases the risk of fraudulent activity in CNP transactions.
How can software companies protect their users from card-not-present fraud?
Software companies can protect their users and transactions processed by partnering with a payments provider that has the expertise and solutions to prevent, detect, and stop fraud across every entry point and every channel. The right payments partner will also enable strategies like “Know Your Customer” to ensure customer information can be verified.
Learn more about fraud prevention.
Are interchange rates higher for CNP transactions?
Typically. Due to the higher risk associated with CNP transactions — compared to CP transactions — CNP transactions come with higher interchange rates and fees. However, software companies can work with their payments partner to implement the strategies and solutions that optimize the interchange rates for all transactions.
Terms related to card-not-present transactions
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