Card-present and card-not-present transactions define how a credit or debit card payment is made—either physically at a point of sale or remotely through online or phone channels. Each method comes with its own level of security, fraud risk, and processing fees, which can significantly impact how businesses manage transactions and protect customer data.
A card-present transaction is a type of payment where the physical payment card is used in person during the transaction, typically at a point-of-sale (POS) terminal. This includes payments made by:
These transactions occur face-to-face, allowing the payment terminal to read the card directly and often requiring verification, such as a PIN or signature. Because the cardholder is physically present and the card is processed using secure technology, card-present transactions are generally considered less risky and more secure.
For this reason, merchants usually benefit from lower processing fees compared to card-not-present transactions, which are more susceptible to fraud and occur through online, phone, or mail orders.
A card-not-present (CNP) transaction occurs when a payment is made without the physical card being present at the point of sale. These transactions are common in remote purchases, where the card information is manually entered instead of being swiped, inserted, or tapped. Card-not-present transactions typically happen in:
Since the cardholder and card are not physically present, CNP transactions are considered higher risk for fraud and usually come with higher processing fees for merchants. To mitigate risks, businesses often use tools like CVV verification, address verification (AVS), and 3D Secure authentication.
When deciding between card-present and card-not-present transactions for your business, consider how and where your customers typically pay. Card-present transactions take place in person, with the physical card used at a point-of-sale (POS) terminal by swiping, inserting, or tapping. These are common in retail stores, restaurants, and service locations, offering lower processing fees and reduced fraud risk.
In contrast, card-not-present transactions occur remotely—such as through online checkouts, phone orders, or subscription billing—where the cardholder inputs their payment details manually. While CNP payments offer greater convenience and wider reach, especially for e-commerce businesses, they carry a higher fraud risk and higher transaction fees.
However, the best choice depends on your business model: if you operate primarily in-person, card-present systems are more secure and cost-effective; if you sell online or offer remote services, card-not-present options must be paired with strong fraud prevention tools.
A Card-Not-Present (CNP) transaction occurs when the cardholder isn't physically present, like online purchases, preventing card swipe or insertion.
Card-on-File payments securely store a customer's card info for future use, replacing sensitive data with encrypted tokens for safety and convenience.
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