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CNP – What is it and how does it work?

by | Jan 6, 2022

“Confused? Confusion is good, it’s an excellent place to learn something new.” – Edward R. Murrow.

Welcome to the first of Swipen’s ‘Payments Parlance’ blog posts. Acronyms, techspeak, compliance, and seemingly random fees can leave us all confused and wondering, ‘what does it all mean?’. This series is designed to help explain the terminology, issues and charges that often surface within the payments industry.

Today we start with CNP and its associated charges. 

 

What is CNP?

Firstly, CNP stands for ‘Card Not Present’, sometimes known as a ‘remote purchase’ – when neither the card nor the cardholder are physically present at the time of the transaction. There are multiple commonly used examples of CNP transactions:

  • Purchases Online – when customers purchase items through the internet or via an e-commerce transaction.
  • Phone Orders – when a customer gives their card details verbally over the phone or by typing into a phone keypad.
  • Recurring Payments – ongoing transactions that are set up to pay automatically.
  • Invoices – which are usually paid online.
  • By Mail – when customers provide their card details on order forms, such as when ordering from a catalogue.

Therefore,‘Card Present’ is only considered to be a transaction conducted in person, at the time of the purchase.

 

How secure are CNP transactions?

The very nature of a card and cardholder not being present for a transaction naturally causes security issues. 

CNP purchases processed through the internet are usually subject to security checks through a payments gateway, such as buyer identification verification and data encryption. 

However, when credit card details are taken verbally over the phone or by mail (MOTO), the level of security is reduced to almost zero, for both the customer and the merchant. Such transactions can open up a merchant to fraud and chargebacks.

In 2019, CNP transactions made up 76% of all card fraud losses, costing a whopping £470 million in UK-issued card losses.

Let’s look at an example:
If you were a hotel and took a payment from a customer over the phone for a room booking, that customer could potentially stay at your hotel, then phone their bank and say they did not authorise the transaction and that their card has been stolen. They would get their money back straight away, and you would be subject a chargeback fee of £25, with the money they paid for the hotel room taken off your next batch. No questions asked.

None of us ever wants to be the victim of a fraud and many companies have avoided taking CNP payments due to the added risk and charges. For some, however, taking CNP payments is something they simply cannot avoid.

 

Why am I seeing CNP charges on my statements?

Due to this increased risk of fraud and chargebacks, fees for processing CNP transactions are more expensive.

When looking at your business statements, you may notice (often hidden) CNP charges creeping in. They’re typically 0.5% on credit and corporate card purchases, and a flat 50p per debit card transaction. It soon mounts up if your business needs to take a lot of CNP payments.

What’s the solution?

The good news is that there is an easy solution. Swipen’s Virtual Terminal web portal allows you to take payments over the phone safely and securely. 

It’s ideal for:

  • Call centres
  • Travel agents
  • Travelling salespeople
  • Mobile tradespeople
  • Restaurants for pre-bookings and parties
  • Hotels for rooms and events
  • Any business that doesn’t have a website that customers can pay through

You can capture full customer details, offer pay-by-link, and take payments anywhere from a desktop, tablet or mobile device. You can learn more about that here. 

And those pesky charges?

Swipen does not charge anything extra for CNP transactions, so you can say goodbye to all those additional CNP charges.

You’re welcome to contact Swipen to find out more and discuss how we can help your business take CNP payments securely and save money on fees.

We knew there was a better way and so we created Swipen.

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