card not present transaction

Card Not Present Transactions: Everything You Need to Know

While CNP transactions are convenient for consumers, they pose a greater risk for fraudsters. That’s because it’s harder to verify the cardholder’s identity when the card is not present. As a result, CNP fraud is one of the most common types of credit card fraud.

In this guide, we’ll cover everything you need to know about CNP transactions, including how they work and how to prevent fraud.

What is a card not present transaction?

A card not present transaction is any credit or debit card transaction that occurs without the card being physically present. This can include transactions made over the phone, online, or via mail order.

CNP transactions are more convenient for consumers than traditional point-of-sale (POS) transactions because they don’t require the cardholder to be physically present. However, this convenience comes at a cost. CNP transactions are more susceptible to fraud because it’s harder to verify the cardholder’s identity.

What are the Examples of Card Not Present Transactions?

There are three primary types of CNP transactions:

  1. E-commerce transactions: Any time you make a purchase online, you’re completing a CNP transaction. This includes purchases made through a website, mobile app, or even social media platforms like Facebook and Instagram.
  2. Telephone transactions: If you ever make a purchase over the phone, you’re completing a CNP transaction. This includes transactions made with customer service representatives and automated telephone systems.
  3. Mail order transactions: Whenever you make a purchase through the mail, you’re completing a CNP transaction. This can include online purchases that are shipped to your home, as well as catalog orders that are placed over the phone or through the mail.

How do card not present transactions work?

CNP transactions work differently than POS transactions because the card is not physically present. Instead, the cardholder’s information is stored on a database and processed electronically.

When a customer initiates a CNP transaction, their credit or debit card information is sent to the merchant through the card network. The card network then verifies that the customer has enough funds to cover the purchase and routes the transaction to the merchant’s bank.

The merchant’s bank then deposits the funds into the merchant’s account and sends a confirmation back to the card network. Once the card network receives confirmation, it notifies the customer that the transaction is complete.

What are the risks of card not present transactions?

CNP fraud is one of the most common types of credit card fraud. This is because it’s harder to verify the cardholder’s identity when the card is not present. As a result, criminals can more easily steal credit and debit card information and use it to make fraudulent purchases.

There are a few different ways that criminals can commit CNP fraud:

  1. Skimming: Skimmers are devices that criminals attach to ATMs and POS terminals in order to steal credit and debit card information. Once a card is swiped through a skimmer, the device captures the card’s magnetic stripe data. This data can then be used to create a counterfeit card, which can be used to make fraudulent purchases.
  2. Phishing: Phishing is a type of online fraud that involves criminals sending fake emails or text messages that appear to be from a legitimate source. These messages typically include links that lead to fake websites that are designed to steal your credit card information.
  3. Data breaches: Data breaches occur when criminals gain access to a company’s database of customer information. This data can include credit and debit card numbers, as well as other sensitive information like Social Security numbers and addresses. Once this data is stolen, it can be used to make fraudulent purchases or sold on the black market.

What can you do to prevent card not present fraud?

There are a few steps that you can take to protect yourself from CNP fraud:

  1. Use a secure payment method: When making a purchase online, be sure to use a secure payment method like PayPal or a credit card with fraud protection. Avoid using debit cards or bank account transfers, as these are not as secure.
  2. Check your statements: Be sure to check your credit card and bank statements regularly for any unauthorized charges. If you see anything suspicious, report it to your financial institution immediately.
  3. Use a fraud monitoring service: Fraud monitoring services can help to protect your information by monitoring your credit report for any suspicious activity. If any fraud is detected, they will notify you so that you can take steps to protect yourself.
  4. Keep your information safe: Be sure to keep your personal information safe by never sharing your Social Security number, date of birth, or credit card number with anyone. If you’re ever asked for this information, be sure to verify that you’re dealing with a legitimate source before sharing anything.

Card not present (CNP) fraud is a type of credit card fraud that occurs when a criminal makes a purchase without physically presenting the credit card. This can be done by skimming credit card numbers, phishing for personal information, or stealing data from a company’s database.

CNP fraud is one of the most common types of credit card fraud, so it’s important to take steps to protect yourself. You can do this by using a secure payment method, checking your statements regularly, and using a fraud monitoring service. Additionally, be sure to keep your personal information safe by never sharing it with anyone.