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Card-Not-Present vs. Card-Present Transactions

June 14, 2017

Thanks to the EMV liability shift and a number of other factors in the payment processing industry, more merchants are revisiting their point-of-sale capabilities and looking for the best ways to boost payment security.

 

Thanks to the EMV liability shift and a number of other factors in the payment processing industry, more merchants are revisiting their point-of-sale capabilities and looking for the best ways to boost payment security. For most, that will simply mean ensuring card-present transactions conform to new standards, but others may also deal with card-not-present purchases, and it’s vital to know the difference.

Whenever merchants, regardless of size, are looking at how they handle various types of transactions, it’s a good idea to follow industry-recommended best practices to ensure each purchase is as secure as possible.

As the two names imply, the key difference between CNP and CP transactions revolves around whether the customer or client is using a physical card to complete the transaction. Traditionally, CNP purchases will be those completed online, where customers enter payment information before delivery of an item or service, but this is also true for subscription services or memberships, according to Ingenico. But there are plenty of other differences to monitor as well.

The changing payments ecosystem requires merchants to learn the differences between CP and CNP.The changing payments ecosystem requires merchants to learn the differences between CP and CNP.

Digging Deeper
Another major difference between these two transaction types – and it’s one merchants will surely notice in their bottom lines – is that it’s often more expensive to process CNP purchases than CP purchases, the report said. Further, CP transactions in today’s EMV-heavy environment are far more likely to be secure and not result in fraud.

Moreover, to qualify to even have the ability to accept CNP purchases, payment processors will often require businesses to get certification through a multi-step process, Visa noted. For instance, that payment giant – which processes more transaction than any other company on earth – has specific rules for how CNP transactions can be carried out to qualify for its Custom Payment Service program. These include the requirement that card data be shared either via mail or over the phone, rather than online. Furthermore, the company recommends that shipments for mail-order and phone orders be verified using the cardholder’s proper address, and with proof of delivery.

Liability is the Key
But perhaps the biggest issue for merchants to keep an eye on when it comes to CNP versus CP transactions is how liability for fraud and chargebacks shifts to them, according to CardFellow. The EMV liability shift means that any fraud on non-EMV card-present purchases is now a liability for the merchant, rather than the payment processor or financial institution that issued the card. Similar concerns apply for CNP transactions as well.

With all this in mind, it’s vital for merchants to familiarize themselves with how these issues will affect them as they assess their current and future payment processing needs, the report said. The more they can do to understand the differences in the various transaction types they handle and what they will mean for their payment security and bottom lines, the better off they’re likely to be as consumers’ payment preferences continue to evolve.

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