As e-commerce continues to grow year-over-year, so does the amount of card not present (CNP) transactions. While consumers often prefer these types of transactions due to the ease of making purchases from their computer or mobile device, credit card fraud runs rampant in CNP transactions and can create huge headaches for merchants.

Below we explain how CNP transactions work, as well as the risks they present to merchants.

What Are Card Not Present Transactions?

Just as the name suggests, card not present transactions are purchases that occur without the buyer and seller being in the same place. CNP transactions typically occur when a consumer shops online, but they can also occur during a transaction via telephone or mail order.

Online shopping continues to increase in popularity year-over-year, as consumers appreciate the convenience of CNP transactions and shopping from their couches. According to recent data from BigCommerce, 51% of Americans prefer to shop online, and 80% have made an online purchase in the past month.

The Risks of Card Not Present Transactions

The risk for merchants is a lot higher for card-not-present merchants than it is for card-present merchants. When a transaction is made with the buyer and merchant in the same place, the merchant is able to verify the transaction personally. In an effort to protect themselves, the merchant can compare the credit card to a driver?s license or ID card, look at the back of the card for a signature, or require a PIN to be entered.

Merchants processing card not present transactions do not have the same opportunity to verify the purchase. This makes them more susceptible to two types of fraud:

Credit card fraud is when a criminal uses a stolen credit card or card number to make purchases that the cardholder did not authorize.

Chargeback fraud occurs when a buyer orders and receives something from a merchant, but tells their bank that they either did not authorize the charge or did not receive the product.

Protect Your Business from Card Not Present Fraud

Card not present fraud remains a persistent threat to merchants, but there are steps they can take to protect themselves. Working with a reputable credit card processor, investing in the right security solutions, and following best practices to detect and reduce fraud can help merchants protect their businesses.

Aliant is proud to be a highly regarded payment processor that specializes in e-commerce processing. With over 14 years of experience in the payment processing industry, our friendly and knowledgeable integration specialists are equipped with all the tools to quickly identify, address and resolve issues during the integration process. To learn more, or to get started, contact us or call 888.638.6103.