Card not present (CNP) transactions refer to any type of card payment where the physical credit/debit card is not present at the time of purchase. Common CNP transactions include online, telephone and mail order payments.
The rise in e-commerce has created an increase in CNP fraud over recent years. The main issue with CNP fraud is that card details can be easily stolen and abused online, compared to traditional point-of-sale transactions where the physical card must be present for the payment to take place.
For this reason, it's important for merchants to ensure they have robust processes in place to identify and prevent CNP fraud. Below are our top tips for reducing CNP fraud.
- Utilize 3D Secure authentication: This type of authentication requires the cardholder to enter a one-time code or answer security questions verified by their issuing bank before they can complete the payment transaction. This extra layer of security significantly reduces the risk of fraudulent payments and helps merchants reduce their chargeback costs.
- Utilize robust screening and fraud prevention software: Using advanced analytics, merchants can review each transaction to assess the risk of fraud before approving it. Such software will also help identify any suspicious patterns or activities that could be indications of criminal behavior.
- Ask your payment processor for protection: Many payment processors offer additional protection against fraud, such as tokenization and encryption. This helps protect the cardholder’s details from being compromised and reduce the chances of fraudulent transactions.\
- Check customer information: When processing a CNP transaction, merchants should ask for personal information that can be verified elsewhere, such as an address or telephone number. This helps to reduce the risk of fraudulent transactions and can easily be done via a customer database or through third-party services.
- Be mindful of high-risk locations: Transactions from countries with known fraud activity should be monitored closely and action taken when necessary, such as asking for additional authentication from the customer or declining the transaction altogether.
Following these tips will help merchants reduce the risk of fraudulent transactions and chargebacks, as well as improving their customer experience. With the right processes in place, merchants can feel confident that they are taking all necessary measures to protect themselves against CNP fraud.