Card-not-present (CNP) transactions are those that occur when the cardholder and merchant are not physically present with one another. This can happen when a customer makes an online purchase, over the phone, or through mail order. In these cases, the cardholder’s information is entered into the merchant’s system, and the transaction is processed without the card being present.
CNP transactions pose a higher risk for fraud than in-person transactions, because it is more difficult to verify the cardholder’s identity. In addition, merchants may be liable for fraudulent CNP transactions, even if they have followed all of the required security procedures. For this reason, it is important for merchants to take extra precautions when processing CNP transactions.
There are a few things that merchants can do to reduce their risk of fraud when processing CNP transactions:
- Verify the cardholder’s identity: This can be done by requiring the cardholder to provide additional information, such as their billing address or a code that is sent to their mobile phone.
- Use AVS and CVV2: AVS (Address Verification Service) and CVV2 (Card Verification Value 2) are security codes that are used to verify the cardholder’s identity.
- Check for suspicious activity: Be on the lookout for signs of fraud, such as unusually large or small transactions, multiple transactions from the same IP address, or orders that are shipped to a different address than the billing address.
If you think that a CNP transaction may be fraudulent, you can report it to your payment processor or credit card issuer. They will then investigate the transaction and take the appropriate steps to resolve the issue.
The risk of fraud is higher for card-not-present (CNP) transactions because it can be more difficult to verify the cardholder’s identity. There are a few things that merchants can do to reduce their risk, such as verifying the cardholder’s identity, using AVS and CVV2, and checking for suspicious activity.
Some Examples of Card Not Present Transactions
There are a few different types of card-not-present transactions. The most common are online purchases, over-the-phone orders, and mail order transactions.
- Online purchases: When you make an online purchase, you provide your credit or debit card information to the merchant through their website or app. The merchant then uses this information to process the transaction.
- Over-the-phone orders: If you order something over the phone, you will need to provide your credit or debit card number to the merchant. They will then process the transaction in the same way as if you had made an online purchase.
- Mail order transactions: Mail order transactions are similar to over-the-phone orders, but they involve physical goods that are shipped to you. In these cases, you will typically provide your credit or debit card information to the merchant, who will then process the transaction.
What Are the Risks of Card Not Present Transactions?
There are a few risks that come with card-not-present transactions. First, it can be more difficult to verify the cardholder’s identity. This is because the merchant does not have the physical card to look at, and they may not have access to other identifying information, such as the cardholder’s signature.
Second, CNP transactions pose a higher risk of fraud. This is because it is easier for criminals to commit fraud when they do not have to present the card in person. They can simply use stolen credit or debit card information to make purchases without the cardholder’s knowledge.
Finally, merchants may be liable for fraudulent CNP transactions. This means that even if the merchant followed all of the required security procedures, they could still be held responsible for the fraudulent transaction.