In the present world situation today, a business in order to facilitate more sales has to accommodate more touchless and online transactions. And your business is no different. It needs Card Not Present Transactions.
What are card-not-present transactions (CNP)?
They are card payment transactions wherein the cardholder cannot physically present the actual card that can be examined visually by the merchant. The card details and the cardholder identity need to be authenticated through a specific process at the same time that the buy order is announced and the payment consummated.
What are examples of CNP transactions?
You come across these processes everyday and many times, we take them for granted. CNP transactions have quadrupled and accelerated in usage since the pandemic began because most people opted for online purchases that are completed without any physical touch involved. These are some examples:
- Buying online, through eCommerce when customers purchase merchandise on the internet.
- Recurring subscriptions and payments that are customized and set up to bill automatically every month or other scheduled frequencies.
- Invoices that are set up to be paid online.
- Purchases over the phone, when a client provides credit card or debit card information to facilitate the payment.
- Mobile wallet payments through an app.
- Online shopping through Buy buttons.
How do you set up an account to accept them?
Research about suppliers and online providers of integrated packages for CNP processes. Their system should allow for fast and easy integration with eCommerce plugins such as WooCommerce, Shopify, Alibaba, and Wix. Their integrated package should also permit easy access and approval into popular online payment methods such as Visa, Mastercard, American Express, PayPal, Apple Pay, Google Pay, and Samsung Pay.
It should also have a simple process for eCommerce refunds and for letting customers have the luxury of choosing their CNP options.
The integrated CNP package should have dedicated 24/7 customer support so that clients will not be distressed in the middle of the night when they’re doubting that they’re being double billed. They could inquire with CNP staff anytime about the status of their payments.
An ideal Card Not Present Transactions package should preferably have no setup or monthly fees so that the merchant need not transfer the costs for these to their customers. In summary, aside from easy and user-friendly integration into your existing store processes, the CNP package that you chose should also provide for Dashboard Reporting and Simple Pricing.
What are the Costs?
As mentioned above, an ideal CNP system should not have initial costs for the setup and there should be no monthly fees.
The costs should be merged with each transaction or purchase. For example, the merchant can access the CNP dashboard from any electronic device with internet access. This makes the said device a virtual POS system anytime, with no card reader or software needed.
Let’s say the CNP transaction fee is 3.5% plus 15¢s. If the online purchase is worth $100, the total bill of the customer would be $103.65 plus shipping charges.
Because it’s a CNP transaction wherein online fraud is so rampant, before the purchase could be consummated, the customer has to go through some steps for authentication purposes.
The customer will enter his card details like the card number, expiration date, CVV, birthday, billing address, and billing zip code. A few CNP providers even go to the extent of asking trick questions like What is the Name of Your First Pet Dog? Anything to minimize the possibility of fraud.
When everything is in order, a button that says Buy waits for a press from the customer to consummate the transaction.
Why do these cost more than card-present transactions?
CNP transactions usually have add-on surcharges at the point of purchase, as illustrated above. This is because both merchants and CNP providers know that CNP payments involve a high probability of fraud.
Heed these real statistics. In 2014, losses from CNP fraud totaled $2.8 billion worldwide. In 2018, it ballooned to $5.5 billion and is expected to mushroom to more than $8 billion in 2021. Because of the risky nature of accepting online transactions, the blame and the liability of letting a fraudulent transaction pass through their systems will be the merchants themselves. It will be their responsibility to refund the customer for fake transactions that used the details of their cards.
Merchants and businesses have no choice but to arm themselves with fraud detection and prevention instruments to be able to validate and authenticate the cards that pass through their system. They wouldn’t want to miss out on sales for their products too, and online eCommerce is the most popular tool these days to make a sale.
It’s worth the efforts of merchants to overcome the fraud challenges of CNP payments. They can be able to sell to any customer in the world who otherwise cannot go physically to their actual location to shop and then eventually pay for their merchandise. And the other way around, it’s also convenient for customers because it requires minimum effort from them to actually buy what they want. They won’t have expenses for gas or for transport expenses in order to make a purchase. The CNP process saves them a lot of time too.