What Is a Card-Not-Present (CNP) Transaction and Why It Costs More

What Is a Card-Not-Present (CNP) Transaction and Why It Costs More
Making a purchase without being physically present is called a card-not-present (CNP) transaction.
by Meredith Galante Mar 05, 2024 — 4 min read
What Is a Card-Not-Present (CNP) Transaction and Why It Costs More


In today’s digital world, if a customer doesn’t have a form of payment in hand, they can still make purchases. How? Making a purchase without being physically present is called a card-not-present (CNP) transaction.

What is a card-not-present transaction?

A card-not-present (CNP) transaction occurs when neither the cardholder nor the credit card are physically present at the time of the transaction. It’s most common for remote orders — over the phone or by fax, internet, or mail.

A transaction is only considered “card present” if payment details are captured in person at the time of the sale. This occurs when cards are physically swiped, tapped, or dipped through a reader or if an EMV chip is processed.

Examples of card not present transactions

There are a number of CNP transactions that you probably come across every day. They include:

How much does it cost to process credit cards remotely?

Just like processing credit cards in person, your business will have to pay to process card-not-present payments. As a refresher, the types of credit card processing fees that make up your rate are interchange fees, assessment fees (charged by card brands like Visa and Mastercard), risk and PCI compliance, as well as your payment provider’s markup.

Generally, interchange fees are higher for card-not-present transactions because the chance of fraud and chargebacks is higher without the card present. These higher processing costs are then passed down to the merchant, which is why card not present transactions are usually more expensive than card-present transactions.

Square Processing Fees Video

Learn how card-not-present payment processing fees work with Square.

In 2018,CNP transactions made up 54% of all losses to fraud worldwide. Payments experts expect this number to gradually increase with the growth and adoption of eCommerce.

Understanding card-not-present fraud and how to prevent it

Card-not-present fraud is a type of credit card scam in which a defrauder uses someone else’s compromised card information to make a remote purchase. Because both the card and cardholder aren’t physically present (and fraudsters often steal complementary information like the CVV and billing address), it can be difficult for merchants to verify the purchaser’s identity.

According to a 2020 Lexis Nexis True Cost of Fraud Study, every $1 of fraud costs U.S. retailers and eCommerce merchants $3.75 per transaction. It’s important to take proactive steps to stop credit card fraud, especially with CNP transactions.

According to a 2017 US Payments Forum, the two best, most commonly used methods for authenticating online transactions are card verification numbers (CVN) — the three or four digits on the back of the card — and negative lists, also known as blacklists.

The address verification system (AVS) is also an effective way to verify the address of the person claiming to own the credit card. The system checks the billing address of the credit card provided by the customer with the address on file at the credit card company. This is why most payment processors, including Square, will ask you to verify your customer’s billing address before authorizing a CNP charge.

The MRC report indicates up-and-coming tools to authenticate payments will be 3D Secure (3DS) and device fingerprinting (like your iPhone’s home button or Face ID). 3DS is an authentication method that provides an additional layer of authentication for credit card transactions, protecting against fraudulent actors. 

Four easy ways to accept and process CNP cards with Square

With Square, there’s no need to sign up for a separate card-not-present merchant account to process online payments. Here are some of the affordable ways to process CNP transactions with Square.

Process a card-not-present transaction with Square Virtual Terminal.

Square Virtual Terminal is a free product offered by Square that lets you safely process credit cards over the phone, by fax, or by mail. Simply open your Dashboard and turn any computer into a virtual POS system — no card reader or software needed. The Square card-not-present transaction fee when you manually key in is 3.5% + 15 cents.

Here are the steps to process a CNP transaction on Square Virtual Terminal:

Process a card-not-present transaction with manual entry.

Here are the steps to process a CNP transaction in the Square Point of Sale app:

Open the Square Point of Sale app and follow the steps below to minimize the risk of payment disputes when making card-not-present transactions. The manual card entry fee is 3.5%+15 cents.

Process a card-not-present transaction with Square Online Checkout, Square Online, eCommerce API, or invoices.

When a customer makes a purchase through other card-not-present transaction methods such as Square Online Checkout,  Square OnlineeCommerce API, or pays an invoice online, the fee is 2.9% + 30 cents.


Meredith Galante
Meredith Galante is a freelancer writer based in New York City. She's been writing for Square since 2017 where she's covered everything from the best software for restaurants to use to maximize profit, minimum wage laws across the country, and tips for entrepreneurs to maximize their impact.


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