Card not present (CNP) refers to transactions where the cardholder's physical card is not present at the point of sale. The most common card-not-present environments include e-commerce (online shopping), telephone orders, mail orders, and recurring billing.
Card-not-present transactions carry higher interchange rates and higher fraud risk because: - The card cannot be physically verified - The cardholder's identity cannot be visually confirmed - Stolen card numbers can be used without the physical card - No EMV chip cryptogram is generated (the primary anti-counterfeiting measure)
The card-not-present premium varies by card type but is typically 0.40%–0.80% higher interchange than equivalent card-present rates.
CNP fraud reduction measures: - **CVV/CVC verification**: 3-4 digit security code on the back of the card - **AVS (Address Verification Service)**: Matches the billing address provided against the issuing bank's records - **3D Secure (Verified by Visa, Mastercard Identity Check)**: Additional authentication step where cardholder verifies their identity with their bank - **Velocity checks**: Limiting transactions from the same card or IP address - **Machine learning fraud scoring**: Real-time risk assessment of each transaction
For online merchants, 3D Secure (3DS) can shift liability for fraud chargebacks to the issuing bank when the cardholder completes the authentication step. This is one of the most powerful fraud liability shift tools available.
Card-not-present merchants face a dual challenge: higher interchange rates AND higher fraud risk. Online merchants should implement all available fraud prevention tools (AVS, CVV, 3DS, velocity limits) to both reduce fraud losses and potentially qualify for better interchange rates.
Some online merchants implement 3D Secure for high-risk transactions (large orders, new customers, unusual shipping addresses) while maintaining a frictionless checkout for known customers — balancing conversion rate with fraud prevention.
Online pet supply store, $75 average order: - Card not present interchange rate: 1.80% + $0.10 = $1.45 - Equivalent card present rate (if they opened a retail location): 1.51% + $0.10 = $1.23 - Per-transaction difference: $0.22 - On 2,000 transactions/month: $440/month in additional interchange from CNP environment - This is a real cost — but CNP enables broader market reach that typically offsets the difference
Implement AVS, CVV verification, 3D Secure authentication for high-risk orders, velocity limits per card/IP, and machine learning fraud screening. These measures reduce fraud AND can help qualify for better interchange rates.
Yes. When a cardholder successfully completes 3D Secure authentication, liability for fraud chargebacks shifts from the merchant to the issuing bank. This is particularly valuable for high-ticket e-commerce transactions.
Liberty Bancard supports e-commerce merchants with full CNP processing infrastructure including AVS, CVV, 3D Secure, and fraud screening tools. Our interchange plus pricing ensures you see the actual cost of each transaction type in your e-commerce stack.
Continue learning: Browse all 60 payment processing terms in our Payment Processing Glossary, or upload your statement for a free analysis of your current processing costs.