When making a payment through a credit or debit card, the cardholder encounters one of the two types of transactions. Either they pay through a card-present transaction or they use the card-not-present (CNP) approach.

In most cases, card-not-present transactions are conducted when the location of the customer and the merchant is different at the time of the purchase. On the other hand, when the merchant is physically present at the location, the customer conducts a card-present transaction.

What is CNP Transaction?

It is important to understand that even if the cardholder has the card with them at the time of purchase, the transaction is classified as a card-not-present as long as the electronic data is not provided with the transaction.

How Does a CNP Transactions Work?

So, how is the electronic data shared in a CNP transaction? The answer is simple. In a CNP transaction data is typically shared over the internet, on phone or through a mail order. When dealing over the internet, the customer enters their billing, shipping and payment information into a form that sends this data to the seller.

On the other hand, when data is shared over the phone, the customer verbally tells the details and the seller enters it manually in their system. Similarly, when data is sent through the mail, the seller enters it manually in their system.

In all these three cases, the same information is needed and is usually processed in the same manner. Here’s a list of information required to successfully conduct a CNP transaction.

  • The card number
  • Security code of the card
  • The expiration date of the card
  • Personal billing information

The payment processor, parent bank of the card, and the card network work together to review the information in order to complete the transaction. In case of missing, faulty or false information, the transaction is declined.

Examples of CNP Transactions

CNP transactions are more common than you might have imagined. You conduct a CNP transaction every time you purchase an app or a song on your phone. Let’s have a look at some common examples of CNP transactions.

1.    Online Transactions

The emerging trend of online shopping is increasing by the minute. All online transactions are a type of CNP transaction. Every day hundreds of thousands of CNP transactions are conducted, thanks to e-commerce giants like Amazon, eBay, and Alibaba Groups.

2.    Telephone Purchase

The trend of making purchases over a telephone call is slowly decreasing as more people are moving towards online shopping. Still, a number of people prefer telephone calls to pay for their bills and other services.

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