What is CNP?

A CNP (Card Not Present) transaction is a payment where the physical payment card isn't shown or swiped by the merchant during the purchase process, typically occurring online or via phone orders.

Key characteristics of CNP transactions include:

• Online Transactions: Purchases made through e-commerce websites or apps.
• Phone Orders: Transactions completed over the phone where card details are provided verbally.
• Recurring Payments: Subscription or membership fees automatically charged at regular intervals without physical card usage.

CNP transactions inherently carry greater fraud risk compared to Card Present (CP) transactions because merchants cannot physically verify the cardholder's identity. To manage this risk, advanced authentication methods such as passkeys, two-factor authentication (2FA), and secure payment gateways are essential in safeguarding consumers and merchants from fraud.

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CNP transactions are integral to modern commerce, particularly due to the surge in online shopping, mobile commerce, and digital subscriptions. The convenience of shopping from anywhere without physically presenting a card has significantly increased consumer satisfaction and revenue for businesses. However, this convenience comes with heightened security challenges.

CNP transactions are vulnerable to certain types of fraud because the cardholder's identity can't be confirmed physically by the merchant. Common threats include:

• Fraudulent Transactions: Unauthorized use of stolen card details obtained via phishing attacks, data breaches, or malware.
• Chargebacks: When consumers dispute charges, merchants may incur losses and penalties, damaging their revenue and reputation.
• Identity Theft: Criminals using stolen personal information to perform transactions, leading to financial loss for both customers and merchants.

Given the inherent risks, robust security measures and authentication methods are critical for protecting CNP transactions:

• Passkey Authentication: Passkeys replace traditional passwords with secure cryptographic credentials, significantly reducing vulnerabilities associated with phishing and stolen passwords.
• 3D Secure Protocol (3DS): A security standard where issuers validate cardholders through additional authentication steps during online transactions.
• Tokenization: Replacing sensitive card data with unique identifiers (tokens) to minimize exposure of actual card information.
• Multi-factor Authentication (MFA): Combining passkeys, biometrics, and device verification to authenticate users securely and efficiently.

Adopting modern authentication methods like passkeys brings substantial advantages:

• Improved Fraud Prevention: Passkeys significantly reduce fraud risk by eliminating traditional password vulnerabilities and ensuring strong customer authentication.
• Better Customer Experience (UX): Passkey authentication is faster, smoother, and frictionless, enhancing customer satisfaction and boosting online transaction completion rates.
• Reduced Operational Costs: Fewer fraud-related incidents mean lower operational costs and chargebacks for merchants.

Common real-world examples of CNP transactions include:

• Online shopping at retailers such as Amazon or Zalando.
• Subscription services like Netflix or Spotify, where payment details are stored for recurring billing.
• Food delivery and booking services where payments are completed online without physical card usage.

Implementing secure, reliable authentication methods like passkeys helps merchants manage CNP risks effectively, creating a safer environment for consumers and businesses alike.

CNP stands for "Card Not Present," describing transactions where the physical card isn't physically shown or swiped, such as online or phone-based purchases.

CNP transactions are riskier because merchants cannot physically verify the cardholder or inspect the payment card, making it easier for fraudsters to use stolen card details.

Merchants can reduce CNP fraud by implementing advanced authentication methods like passkeys, multi-factor authentication, 3D Secure protocols, and tokenization.

Yes, passkeys significantly enhance security for CNP transactions by replacing vulnerable passwords with cryptographic authentication, thereby reducing fraud and improving user experience.

An example of a CNP transaction is buying clothes online through Amazon or subscribing to a streaming service like Netflix, where the customer enters payment details digitally without physically using the card.