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 becoming 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? Generally speaking, payment types can be 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, if the card information is manually typed into the card terminal, even if the customer is standing there with their card, the transaction is considered card not present 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


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. This means that once a product or service is delivered to a customer, that customer can then argue that they never authorized that charge or they didn’t receive the product. In these cases, the liability rests with the merchant.

All’s not lost, however! There are steps you can take to increase the security of your card not present transactions.

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.

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.


Whether a card is present or not, all businesses that handle credit card information must be PCI compliant. This simply means that the business practices are 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!


How Much Do CNP Transactions Cost

Interchange costs vary slightly from card to card across hundreds of card types – so a direct answer to this question is hard to come by. Generally speaking, however, 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.


Ways Fattmerchant Helps You Accept CNP Transactions

Although CNP transactions might sound a little scary, many business models require them in order to be successful. With Fattmerchant, we offer secure ways to accept CNP transactions without the hassle.


  • 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 You’ll experience all of the benefits of processing with with the simple subscription pricing Fattmerchant is known for.
  • 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 is built to help developers create a payment flow that’s perfect for their needs.


Final thoughts: Try to avoid CNP transactions where possible for your business – especially if you’re keying card information online or into a terminal with the card present. At the end of the day, CNP transactions are a very popular way for customers to give payments, so it might be unrealistic to avoid them completely. Just make sure you’re working with a payment processing company that takes security seriously and offers hassle-free ways to accept those card not present payments.

Have you found ways to avoid CNP transactions at your business? Tell us about it in the comments!

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