Card-Not-Present (CNP)
Transactions where the physical payment card is not physically presented to the merchant at the time of purchase, including online, phone, mail order, and recurring billing transactions.
Card-not-present transactions are distinguished from card-present transactions based on whether the merchant can physically inspect the card and verify cardholder presence. CNP transactions include e-commerce purchases, phone orders (MOTO - mail order/telephone order), recurring subscription charges, and card-on-file transactions. Because the merchant cannot verify the physical card or cardholder identity, CNP transactions carry higher fraud risk, resulting in higher interchange rates and greater chargeback liability for merchants.
Interchange rates for CNP transactions typically range from 0.30% to 0.70% higher than equivalent card-present transactions. This premium compensates issuing banks for increased fraud risk and reflects the greater chargeback exposure merchants face when cards are not physically verified. Card networks publish distinct interchange categories for CNP transactions, with rate reductions available when merchants implement security measures such as Address Verification Service (AVS) matching, card verification value (CVV/CVV2) validation, and 3D Secure authentication.
The growth of e-commerce has made CNP the dominant transaction type for many businesses. To mitigate fraud risk and qualify for optimal interchange rates, merchants should capture and submit complete transaction data including billing address, CVV codes, and customer IP addresses, implement fraud screening tools and velocity checks, use 3D Secure authentication where appropriate, maintain clear transaction descriptors to prevent friendly fraud, and monitor for suspicious transaction patterns. Despite higher costs, CNP transactions enable merchants to reach customers beyond physical locations and support modern commerce models like subscriptions and digital goods.
Related Content
Optimize Your Payment Processing
Let Verisave analyze your merchant statement to identify hidden fees and misconfigurations related to card-not-present (cnp).
Get a Free AuditRelated Terms
3D Secure
An authentication protocol for online card transactions that adds an additional verification layer between the cardholder and issuing bank, shifting fraud liability from merchants to card issuers when properly implemented.
ACH Payment
Automated Clearing House payment is an electronic bank-to-bank payment method that transfers funds directly between bank accounts through the ACH network, typically used for direct deposits, bill payments, and recurring transactions.
Acquirer
A financial institution that processes credit card payments on behalf of merchants, maintains merchant accounts, and facilitates the settlement of funds from card-issuing banks to merchant bank accounts.
Address Verification Service (AVS)
A fraud prevention tool that compares the numeric portions of a billing address provided during a transaction against the address registered with the card-issuing bank, returning match result codes to help merchants assess transaction risk.
Aggregator
A payment service provider that enables multiple merchants to process card transactions under a single master merchant account rather than each merchant having their own dedicated merchant account, common with services like Square, Stripe, and PayPal.