Card Not Present (CNP)

Card Not Present (CNP) refers to a type of transaction in which a credit or debit card is used for payment without the physical presence of the card itself. This payment method is commonly used in e-commerce, telephone orders, mail orders, and other remote transactions where the customer and the merchant are not physically present in the same location.

CNP transactions are typically conducted through various electronic channels, such as online shopping platforms, mobile applications, or over the phone. In these scenarios, the customer provides their card details, including the card number, expiration date, and security code, to the merchant for processing the payment. The merchant then uses this information to initiate the transaction and obtain authorisation from the cardholder’s issuing bank.

Security Challenges

While CNP transactions offer convenience and accessibility, they also present unique security challenges compared to traditional in-person transactions. The absence of physical card verification increases the risk of fraud and unauthorized use of cardholder information. Fraudsters may attempt to exploit vulnerabilities in the payment process, such as stealing card details or using stolen card information to make unauthorized purchases.

To mitigate these risks, merchants and financial institutions employ various security measures and technologies. These include robust encryption methods to protect sensitive cardholder data during transmission, multi-factor authentication processes to verify the identity of the cardholder, and advanced fraud detection systems that analyse transaction patterns and flag suspicious activities.

Chargebacks and Disputes

Another aspect associated with CNP transactions is the higher likelihood of chargebacks and disputes. A chargeback occurs when a cardholder disputes a transaction and requests a refund directly from their issuing bank. This can be due to reasons such as non-receipt of goods or services, fraudulent activity, or dissatisfaction with the purchase.

Chargebacks can be costly for merchants, as they may be required to refund the transaction amount, pay chargeback fees, and potentially suffer damage to their reputation. To manage chargebacks effectively, merchants must maintain accurate records of transactions, promptly address customer inquiries and concerns, and adhere to industry best practices to minimize the occurrence of disputes.

Industry Regulations and Compliance

CNP transactions are subject to various industry regulations and compliance standards aimed at protecting cardholders’ sensitive information and preventing fraudulent activities. The Payment Card Industry Data Security Standard (PCI DSS) sets forth requirements for merchants and service providers to safeguard cardholder data, implement secure payment processes, and regularly assess and maintain their security measures.

Compliance with PCI DSS and other applicable regulations is crucial for merchants to ensure the security of CNP transactions and maintain the trust of their customers. Failure to comply with these standards can result in financial penalties, reputational damage, and even the loss of the ability to process card payments.


In an increasingly digital world, Card Not Present (CNP) transactions have become an essential part of the global financial ecosystem. While offering convenience and accessibility, CNP transactions also come with security challenges, potential chargebacks, and the need for regulatory compliance. By implementing robust security measures, adhering to industry regulations, and prioritizing customer satisfaction, merchants can effectively navigate the complexities of CNP transactions and provide a secure and seamless payment experience for their customers.