What is Card Not Present (CNP)?
Welcome to our “Definitions” blog series where we break down complex financial terms and explain them in a simple and understandable way. Today, we will be discussing Card Not Present (CNP) transactions. Have you ever wondered what CNP means in the world of financial transactions? Well, you’ve come to the right place! Let’s dive in and uncover the meaning behind Card Not Present.
Definition of Card Not Present (CNP)
Card Not Present (CNP) refers to any credit or debit card transaction where the cardholder is not physically present at the point of sale. In a CNP transaction, the cardholder provides their card details, such as the card number, expiration date, and security code, to the merchant through alternative channels. These alternative channels include online purchases, mail-order purchases, telephone orders, or any other transaction where the cardholder is not physically present at a traditional brick-and-mortar store.
How Does Card Not Present (CNP) Work?
When a customer wishes to make a purchase but cannot be physically present, the merchant uses CNP transactions to process the payment. Here’s a step-by-step breakdown of how CNP transactions typically work:
- The customer selects the desired product or service online or through other remote means.
- The customer enters their card details, including the card number, expiration date, and security code, into an online payment form or provides the information over the phone.
- The merchant securely transmits the card details to a payment processor or acquirer for authorization.
- The payment processor or acquirer performs various security checks to verify the card details and the availability of funds.
- If the transaction is approved, the merchant can proceed with the sale and provide the goods or services to the customer.
- The funds are then transferred from the customer’s bank account or credit line to the merchant’s account.
Key Takeaways:
- Card Not Present (CNP) transactions refer to credit or debit card transactions where the cardholder is not physically present at the point of sale.
- CNP transactions are commonly used for online purchases, mail-order purchases, and telephone orders.
Card Not Present transactions have become increasingly popular in today’s digital world, enabling customers to shop remotely without the need for physical interaction. However, it is important to note that CNP transactions can carry a higher risk of fraud compared to Card Present transactions. Merchants need to implement robust security measures and adhere to industry regulations to safeguard both their customers’ card data and their own business interests.
We hope this definition has shed some light on the concept of Card Not Present transactions. Stay tuned for more informative blog posts in our “Definitions” series!
