Consumers constantly look for ways to simplify their lives and make transactions easier. One of the ways that this has been made possible is through the rise of Card Not Present (CNP) transactions. CNP transactions are a type of payment where a cardholder purchases without physically presenting their payment card to the merchant.
In fact, according to a report by PULSE, remote purchases have surged to 33% of all charge transactions, up from 23% previously. On average, an active card user makes 7.5 CNP transactions per month. A CNP transaction is initiated whenever credit card information is transmitted through the Internet, telephone, or mail.
A CNP transaction occurs when a payment card is not physically delivered to the merchant at checkout. It means that the card’s magnetic stripe was not swiped, a chip card was not inserted, and the card was not tapped for contactless payment with NFC or RFID technology.
A client adds items to an internet shopping basket and looks at utilizing their card subtleties. Purchase on the web, pickup coming up (BOPIS). Like web-based orders, however, the client gets their request as opposed to having it conveyed.
Telephone orders are a popular way of making CNP transactions. Customers can call a business to place an order and provide their card details over the phone. The business can then process the payment using its payment gateway.
Another example of CNP transactions is repeating installments. This type of transaction is commonly used for subscription-based businesses. Customers can set up recurring payments for services or products, and the payment is automatically deducted from their card each month.
In Contrast to In-App Purchases
Purchases, CNP transactions are made outside of an application. In-app purchases are made within the app, while CNP transactions are made through a website or phone call.
Why Payless Merchant Solution?
Payless Merchant Solution is the perfect choice. We cover many businesses, including retail, restaurants, and online and phone/mail orders. Our quick and hassle-free application process can get you approved in at least two hours with no setup costs.
Payless Merchant Solution specializes in card-not-present transactions and can set up your account and accept credit cards within 24 hours of applying. We also offer state-of-the-art POS systems and payment terminals to keep your business smoothly.
Trust us to provide the dependable, helpful service you need to keep your business running smoothly.
Comparison Between Card Present and Card-Not-Present Transactions
Card-present exchanges are common in physical stores. Customers are typically asked to swipe their credit or debit card into a retail terminal when checking out. These transactions, which capture payment information in person at the point of sale, are considered. Customers can engage with stores innovatively and receive their products without leaving their homes.
With the rise of web-based businesses and online payment processing technology, customers can have the same purchasing experience without physically visiting a store. Card-not-present transactions are processed without the credit card or cardholder physically present at the time of purchase. It allows digital businesses to offer customers their digital products and services conveniently. With this technology, customers can enjoy a hassle-free shopping experience from comfort.
It’s essential to consider whether your transactions are categorized as card-present or card-not-present. It can impact your processing costs and chargeback liabilities. By understanding and monitoring these factors, you can better manage your finances and protect your business from potential losses.
It is important to note that there are three main components: interchange, assessments, and markup. While most of the processing costs are related to business, it’s worth noting that there are thousands of interchange categories. Furthermore, the classification of a transaction is influenced by several variables, including how the card is entered.
What is Card Not Present Fraud (CNP Fraud)?
Card-not-present fraud involves a Mastercard transaction where the cardholder does not physically present their card to the merchant during a fraudulent transaction. This type of fraud is most common in online or telephone transactions.
According to Ian Sells, CEO of Rebate Key, an e-commerce platform for vendors and customers, CNP fraud can take many forms. Cybercriminals can acquire your personal information, such as your name, card number, address, and security code, through various means. Moreover, these highly skilled hackers can steal your data electronically through deceptive phishing schemes. Protecting your information is crucial in today’s digital age.
“Card not present” transactions are often associated with fraudulent activity involving stolen or cloned credit and debit cards,” advises Libby. Merchants must know this and increase security to minimize these fraudulent payments.”
Our top priority is to protect you from card-not-present fraud. Additionally, our dedicated team is always ready to assist you with managing any possible chargebacks. Choose Payless Merchant Solutions for secure and hassle-free online payment processing.
Protecting yourself and your business is essential when faced with a chargeback demand. The Address Verification Service (AVS) is a powerful tool to help you do just that. In some cases, AVS may return a partial match result. However, your processor may still approve the transaction if other information matches. It includes the data they seek, such as:
Email address information
IP address information
The Card Verification Value/Code (CVV/CVC)
AVS is crucial in helping shippers fight chargebacks. While it may not guarantee a successful defense, a full AVS match significantly strengthens their case.
Advantages of Accepting CNP Payments
E-commerce has become the backbone of card-not-present acceptance for retailers, regardless of size. The significance of having an online presence has become increasingly apparent to even the smallest retailers.
However, traditional walk-in stores are still relevant and won’t disappear soon. To succeed in online sales, it’s essential to accept CNP payments.
Providing more payment alternatives improves consumer happiness and yields unintended benefits. Repeat purchases are more likely when customers are satisfied and become loyal clients. Therefore, offering various payment options can be a strategic move to attract and retain customers.
By accepting card-not-present transactions, you can expand your customer reach beyond physical locations and tap into international markets. It opens up the possibility of sales through online purchases and phone and mail orders. This increased flexibility can also help to boost sales and attract new customers.
The potential for sales in eCommerce is enormous. According to the US Census Bureau, eCommerce sales are anticipated to climb by 14% from 2020 to $870.8 billion in 2021. However, to capitalize on this market, card-not-present transactions are essential. Without this capability, no eCommerce organization can thrive.
Disadvantages of Card-Not-Present Payments
It’s essential to be aware of the potential disadvantages of this payment method. One of the significant drawbacks of CNP transactions is the added expenses. For businesses that don’t require a high-risk merchant account, processing fees can be higher than in-person transactions. Visa’s interchange charges, for example, are approximately 15% higher for card-not-present transactions. Another significant concern for businesses accepting CNP transactions is fraud.
Card-not-present transactions are responsible for almost 50% of all credit card fraud cases in the US, leading to billions of dollars in losses. The challenge of authenticating cardholder information in CNP scenarios makes it difficult to verify the legitimacy of a card.
Online transactions with a non-physical card are also prone to chargeback misuse, known as “friendly fraud.” Chargebacks occur when a customer disputes a purchase with their bank or credit card company, and the funds are withdrawn from the merchant’s account. Friendly fraud is when a customer disputes a transaction without a valid reason, leading to a loss of revenue for the merchant.
Additionally, CNP transactions can also lead to reduced customer satisfaction. Customers may not feel as confident in their transactions without physically swiping or inserting their cards.
Reduce Risk & Optimize for CNP Success
As a small business owner, likely, you are constantly seeking means of mitigating risks and ensuring the safety of your business.
1. Get All The Information
Minimizing risk is crucial for traders to achieve success. One effective way to accomplish this is by obtaining complete customer information.
Full name (as shown on card)
Total card number and expiration date
CVV security code
2. Use Available Tools
Identifying and managing risks is crucial in minimizing potential hazards. Fortunately, numerous tools are available to aid us in this process.
3. Keep Excellent Records
Maintaining a record of all relevant documents about a project, such as contracts, emails, notes, and reports, is highly recommended to avoid future disputes. It ensures everyone understands what was agreed upon and what transpired during the project.
4. Understand Seasonal Patterns
By comprehending the seasonal patterns, you can decrease the chances of encountering an issue during that particular period.
5. Optimize Conversion
A visitor’s progression from one stage of your marketing funnel to another is called a conversion. The more successful conversions you attain, the lesser the likelihood of losing those visitors and the higher your revenue potential.
6. Optimize Shipping & Fulfillment
Minimizing the chances of loss for you and your clients is crucial when shipping your merchandise.