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29 Jul, 2021

Card Present vs Card Not Present

What do payment terms such as “card not present” and “card present” mean? And why does it even matter

Online anonymity is a fraudster’s best weapon. Back in the day, criminals were identified based on physically collected data like ID information, aliases and mugshots. In the new digital world, new techniques must be implemented to identify would-be fraudsters.

There are a few reasons that you should care about whether transactions are considered card present or card not present. The primary two reasons are that the method of payment affects your processing costs and your chargeback liability.

But first … what is a CP (Card Present) transaction, and what is a Card Not Present (CNP) transaction?

If you’ve ever accepted a payment online, then you’ve processed a card not present (CNP) transaction. Exactly as it sounds, it’s when neither the consumer nor the credit card is physically present at the time of purchase.

Some examples of CNP transactions are

  • Online shopping carts
  • Recurring or subscription billing
  • Unreasonable expedited shipping.
  • Orders taken over the phone and manually entered
  • Payment apps on smartphones or tablets (that don’t use a card reader)

A card present transaction is only if the cardholder is there in person with their credit card in hand at the time of payment.

Contactless payments such as tapping your credit card or using your cards in your digital wallet, are considered card present transactions because the consumers themselves are physically present at the time of the payments.

Some additional examples of CP transactions are

  • Traditional countertop credit card machines
  • POS Systems with card readers
  • Contactless-enabled terminals