Card-Not-Present (CNP) Transactions and Why They Matter

card not present transactions are important to understand for your small business

Being able to offer your consumers multiple ways to give payment is an increasingly important trend. Your customers want options, and it’s important to meet their needs in order to reduce friction in the buying process. But did you know that not all forms of payment are created equal?

Payment types are split up into two categories – card present (CP) and card-not-present (CNP). The differences between these two types of payments are more important than many business owner realize, and what ones you choose to accept could have a big impact on your business.

What are CNP Transactions?

CNP transactions are any transactions where the magnetic stripe isn’t swiped, the EMV chip isn’t inserted, or a mobile wallet isn’t tapped against a physical terminal. This means that any transaction facilitated over the phone, online, or through fax would be considered card-not-present.

A common misconception when it comes to card-not-present transactions is that as long as the customer is present with their card, the transaction is considered card present. This is not true!

For example, when card information is manually typed into the card terminal, even if the customer is standing there with their card, the transaction is still considered card-not-present. This is because the card itself did not come in contact with the machine.

Types of CNP transactions include:

  • eCommerce shopping carts
  • Online invoices
  • Automatic billing
  • Phone orders
  • Website payments

How Much Do CNP Transactions Cost

Interchange costs vary slightly from card to card across hundreds of card types. Generally speaking, interchange costs for CNP transactions are higher than card present. This is simply because the risk is higher. There is a certain level of confidence that comes along with physically inserting a card into a reader, therefore interchange costs are lower for these types of transactions.

A surprising number of merchants are paying these higher interchange costs without even having to! If you’re finding yourself physically taking a card from a customer and then manually typing in the card information into a terminal or mobile device, you’re paying CNP interchange rates.

Avoid this by investing in a mobile card reader to be able to swipe those cards in the moment instead of entering them manually.

CNP Transactions and Fraud Risk

Aite, an independent research and advisory firm, found back in 2016 that CNP transactions accounted for 45% of all credit card fraud in the U.S. That number is only on the rise with the widespread adoption of EMV, or chip, technology across the country. With EMV chip cards making card present theft more difficult, fraudsters are moving their efforts online.

Since cardholder information is more difficult to verify in card-not-present transactions, there is a higher risk of chargeback fraud as well. When a product or service is delivered to a customer, the customer can argue that they never authorized that charge or they didn’t receive the product.

In these cases, the liability rests with the merchant. However, there are steps you can take to increase the security of your card-not-present transactions.

Use a Secure Gateway

First, ensure your website payments are made through a secure gateway. Investing in a technology that will keep your customer’s information safe is well worth it in the long run for your business.

Capture Important Customer Information

Next, make sure you’re capturing all of the necessary information at the point of checkout from your customer – card number simply isn’t enough!

  • Customer Contact Information: Phone number, email address, and billing/shipping address are especially important for high-value transactions.
  • Card Information: Name as it appears on the card, expiration date, credit card number, and CVV code should all be required in order to further determine that the customer is in possession of the card.

Maintain PCI Compliance

Whether a card is present or not, businesses that handle credit card information must be PCI compliant. All business practices need to be compliant with the security standards set forth by the payment industry.

Business owners can become compliant by taking a quick questionnaire. Members with Fattmerchant are guided through this process by their account manager so all of our members and their customers stay safe and secure!

Ways You Can Accept CNP Transactions

Although CNP transactions might sound a little scary, many business models require them in order to be successful. At Fattmerchant, we offer various ways to securely accept CNP transactions.

eCommerce Shopping Carts

If you’re looking for an online gateway for your eCommerce business, we’ll build you one of the most trusted payment gateways in the industry – our partner

Online Invoices

The Fattmerchant Virtual Terminal helps business send invoices and accept payment for them all online. Users can also set recurring schedules and automatic billing through the platform, getting you paid faster!

Payments API

Do you have your own application that you want to accept payments through? The Fattmerchant API helps developers create a payment flow that’s perfect for their needs.


Now more than ever, CNP transactions have become a very popular way for customers to give payments. That is why it is important that you’re working with a payment processing company that takes offers secure and hassle-free ways to accept those card-not-present payments.

To understand how our Fattmerchant payment solutions can improve your business operations, feel free to contact us for a free consultation today. We will be glad to discuss your needs and deploy our services for your business right away.

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