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What is a Card Not Present (CNP) transaction - Card not present payments 101

Friday, 07 Jan, 2022

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The modern forms of payment are much more diverse than physical practices. Nowadays, consumers have more opportunities to buy goods and services that are sometimes just with credentials and virtual tools. Card not present transactions are one of these approaches on the digital payment trend without the physical presence of card or cash. The article opens up the unrevealed secrets of CNP - card-not present online transactions. Discover now!

What is a Card Not Present (CNP) transaction - Card not present payments 101

What is a Card Not Present (CNP) transaction - Card not present payments 101

1. What is a card not present transaction?

1.1. Definition of Card-present payment

if payment information is collected in person at the time of sale is a transaction considered card-present. A transaction is only termed "card-present" if electronic data is captured at the point of purchase, rather than just the physical presence of the credit card. Swiping a magnetic strip card, dipping an EMV chip card, or tapping an NFC / contactless digital wallet with a stored card, such as a smartphone using Apple Pay or Google Pay or SamSung Pay, can all be used to acquire data. Normally the card-present transaction is executed in person at the point of sale.

Key takeaways

Card-present transaction methods include:

Traditional countertop credit card machines

Traditional countertop credit card machines

POS Systems with card readers

POS Systems with card readers

Contactless-enabled terminals

Contactless-enabled terminals

Card readers connected to smartphones or tablets

Card readers connected to smartphones or tablets

1.2. What is CNP transaction? (Definition of card not present transaction)

When neither the cardholder nor the credit/debit cards are physically present at the time of the transaction, it is known as a card not present transaction. It's particularly typical for orders that take place through the internet. Even if the customer has the card, the transactions are considered "card not present payments" since the electronic data (data on the magnetic strip or EMV chip) was not presented with the purchase.

1.3. Examples of card-not-present transaction

Online shopping carts: when a customer buys products or services on the internet or through an e-commerce platform.

Online shopping carts: when a customer buys products or services on the internet or through an e-commerce platform.

“Buy” buttons on websites: Some websites embed a payment link (direct or redirect link) that enables consumers to make the customer not present card payments.

“Buy” buttons on websites: Some websites embed a payment link (direct or redirect link) that enables consumers to make the customer not present card payments.

Recurring or subscription billing: These options are set up to bill automatically.

Recurring or subscription billing: These options are set up to bill automatically.

Electronic invoicing that is paid online.

Electronic invoicing that is paid online.

Orders taken over the phone and manually entered

Orders taken over the phone and manually entered

Payment apps on smartphones or tablets that don’t use a card reader

Payment apps on smartphones or tablets that don’t use a card reader

2. How to accept card not present transactions (card not present payments)?

In the past, the 2D transaction made consumers feel afraid of card not present fraud because their data was recorded on the e-commerce websites or the merchants intentionally stole the customer payment information.

The worry has been swiped away as the new 3D secure technology is launched into the market. Nowadays many big card issuing companies like Visa, Mastercard or American Express and JCB implemented SCA practice (Strong Customer Authentication) into card-not present online transactions that reinforce the security for the online payment environment.

How to accept card not present transactions (card not present payments)?

How to accept card not present transactions (card not present payments)?

How to do a card-not present transaction?

eCommerce Shopping Carts

Running an online store is not an emerging idea but it has become the new standard for companies. To maximize profits, firms of all sizes should take urgent steps into digitalization and set up business on e-commerce. Apart from a free shopping cart platform called Woocommerce (an ecommerce plugin of WordPress), online businesses can build their websites on other similar platforms namely OpenCart, CS-Cart, Shopify, Wix Ecommerce, Magento Open Source, etc. Online companies can integrate online payment gateway into their website to enable card-not present online transactions.

Online Invoices

Online merchants can send e-invoices with the ability to accept card not present payments. Users can also use the feature to set up recurring schedules and automatic billing, which helps businesses get paid faster.

Virtual Terminal

The digital terminal is the optimal choice for online companies who run business on web browsers and mobile applications. This manually tool enables consumers to input their card payment details on the checkout platform and process instantly on both computer and mobile phone.

Payments API

It is possible to set up a new gateway software for card not present transactions while merchants lack an IT-savvy team. Payment API is developed in a simple approach that helps small firms integrate with a hassle-free mind.

Payment Link

To facilitate customer checkout process takes place faster, simpler; clients can leverage the checkout link feature. By sending the payment link to the customer directly, transactions are able to complete smoothly, no sophisticated procedures.

3. Some best practices for card not present transactions

A card not present transaction (CNP) is one in which the physical card is not presented to the store and is conducted over the phone, the internet, the mail, or a mobile device. The following is a comprehensive list of the common card not present payments best practices:

Shoppers purchasing online can pay for their cart

Some best practices for card not present transactions

Presenting information:

Company brand logo, Contact information, Billing descriptor, Email confirmations and Policies or Terms of Service.

Gathering cardholder data:

Customer information (phone numbers and email address, usually for shipping and billing addresses which are different and with high value orders), Card information (name as it appears on the card, the account number, the card type, and the expiration date, CVV(Visa)/CVC(Mastercard)/CID(Amex) numbers).

Protecting cardholder data:

To mitigate card not present fraud, many factors are involved in protecting cardholder data. PCI certified, tokenization, encryption.

Strong Customer Authentication:

OTP or biometric authentication on smartphones or private keys. This feature enhances the security of card not present fraud, enables customers to be confident in online shopping and buy more on the internet, and stimulates the market needs.

Processing orders:

Address Verification System(AVS), Zero Dollar Verification(ZDF) to test card validity prior to deposit, whether fund availability exceeds the card not present transaction limit or not enough to make payment.

Recurring payments:

When a customer agrees to pay for a product or service at regular periods over a set length of time, this is referred to as recurring payments. Memberships to fitness clubs, insurance payments, energy bills, and subscription costs, for example, are predictable over time. The recurrence can be monthly, quarterly, or annually, and can be set with pre-determined renewal periods (e.g. magazine subscriptions) or permanent (e.g. telephone bills).

Depending on the sale's features, the recurring payments may be equal or different. Recurring payments can speed up payments, cut processing costs, and reduce the chance of human error in manual entry.

Installment billing:

Payments made on a monthly installment billing plan are very common. The length of these programs is set, and the payments are usually the same. Payments are usually made monthly in 3 to 10 payments.

Billing descriptors:

Soft billing descriptors allow companies to change the merchant descriptor information on each transaction. Certain direct marketing merchants (MCCs 5966, 5968, 5967, 5969, and 5962) are required to use a three-letter prefix before providing a more thorough description of their product or service. Because not all processors enable this feature, be sure you buy one that does in case you need it in the future.

Eg: ACM* Great TV Hits 1 of 9 800-555-1234 . . . . . . . . . . $14.95

Soft billing descriptions are extremely useful. They allow merchants to identify transactions on cardholder statements more clearly. They're especially beneficial for installment billing, as each statement can show a cardholder's payment status.

4. Card not present fees

The majority of CNP transactions (card not present transaction) are free of extra charge for consumers. When shoppers purchase online, they can pay for their cart by card-not present online transactions methods with the same price on the website and no more hidden fees. Sometimes, if the purchase value is below a specific minimum value, the online merchants may charge consumers an extra card not present fees to cover it’s transaction fee on each deal.

Shoppers purchasing online can pay for their cart

Shoppers purchasing online can pay for their cart by card-not present online transactions methods with the same price on the website and no more hidden fees.

 

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We have created an open and secure payments ecosystem that entrepreneurs and businesses choose to securely transact with each other online and on any device. We proudly maintain the highest level of client advocacy in the industry.

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