Card-not-present (CNP) transactions are those in which the cardholder is not physically present when the transaction takes place. This can include online purchases, over-the-phone orders, or even mail order transactions. Because the cardholder isn’t present to verify their identity, these types of transactions are considered to be higher risk than in-person transactions.
There are a few things to keep in mind when accepting CNP payments:
- Be sure to verify the cardholder’s identity. This can be done by requiring the cardholder to provide additional information such as their billing address or a security code from the back of the card.
- Be sure to check for fraud. When a cardholder isn’t present, it’s harder to verify that the person making the purchase is actually the cardholder. This means that CNP transactions are more susceptible to fraud. To help combat fraud, be sure to use AVS (address verification system) and CVV (card verification value) checks.
- Be prepared for chargebacks. Because CNP transactions are considered to be higher risk, they are also more likely to result in a chargeback. A chargeback is when a cardholder disputes a transaction and asks their bank to reverse it. To help prevent chargebacks, be sure to have clear and concise refund and return policies, as well as keep clear records of all transactions.
The best way to protect yourself from fraud and chargebacks is to use a payment gateway that offers fraud protection services. These services can help you verify the cardholder’s identity, check for fraud, and even dispute chargebacks on your behalf.
Advantages of CNP Transactions
Even though CNP transactions are considered to be higher risk, there are still a few advantages to accepting them:
- Increased sales: By accepting CNP payments, you open up your business to a whole new group of potential customers. Customers who may not have purchased from you if you only accepted in-person payments.
- Convenience: CNP transactions are more convenient for both you and your customers. Customers can make purchases from the comfort of their own home, and you don’t have to worry about processing payments in-person.
- Reduced costs: CNP transactions often have lower fees than in-person transactions. This is because there’s no need to process the payment through a physical POS (point-of-sale) system.
Disadvantages of CNP Transactions
Even though there are some advantages to CNP transactions, there are also a few disadvantages:
- Higher risk of fraud: As we mentioned before, CNP transactions are more susceptible to fraud. This is because it’s harder to verify the cardholder’s identity when they’re not present.
- Higher chance of chargebacks: Because CNP transactions are considered to be higher risk, they also have a higher chance of resulting in a chargeback. Chargebacks can be costly and time-consuming to resolve, so it’s important to be prepared for them if you decide to accept CNP payments.
- Requires a payment gateway: In order to accept CNP payments, you’ll need to use a payment gateway. This is an online service that processes and verifies credit card payments. Payment gateways typically charge a monthly fee, so this is something to keep in mind if you’re on a tight budget.
How to Accept CNP Payments?
If you decide that you want to accept CNP payments, there are a few things you’ll need to do:
- Choose a payment gateway: As we mentioned before, you’ll need to use a payment gateway in order to accept CNP payments. There are a number of different payment gateways to choose from, so be sure to do your research and find one that’s right for your business.
- Set up fraud protection: Be sure to set up some form of fraud protection, such as AVS or CVV checks. This will help reduce the risk of fraud and chargebacks.
- Have clear policies: Make sure you have clear and concise refund and return policies. This will help prevent chargebacks and keep your customers happy.
- Keep records: Keep clear records of all CNP transactions. This will help you dispute chargebacks and resolve any other issues that may arise.
By following these steps, you can start accepting CNP payments and open up your business to a whole new group of potential customers. Just be sure to keep in mind the risks involved and take steps to protect yourself from fraud and chargebacks.