Complete Guide on Card Not Present Transactions

Processing a payment at a checkout counter using a credit card, debit card, or digital wallet on a smartphone is pretty straightforward. However, when the customer and the merchant simply can’t be in the same physical location, things are different. Processing payments when the customers’ credit or debit card is not present must be handled in a very specific way, and this guide will help explain the entire process from end to end.

Forward-thinking businesses know the importance of being adequately prepared to accept a wide variety of payment methods, including cash, credit cards, debit cards, digital wallets, and more. In many business segments and industry verticals, it’s quite common for transactions to take place in situations where the customer and the merchant are not in the same physical location. It happens all the time in e-commerce, as well as for many B2B companies, where payments are handled online through a virtual terminal, over the phone, and yes, sometimes even by traditional mail. So, how is the transaction process different when the cards or cash are not able to actually change hands?

What Is A Card Not Present Transaction?

Any transaction that occurs when the merchant obtains the customers payment information by a means other than physically handling or viewing the card itself is considered to be a ‘card not present transaction’. Essentially, if your customer pays for their goods or services remotely, you are processing this type of transaction. Some examples of these transactions include mail order payments, phone order payments, online e-commerce transactions, recurring subscription payments, and automatic billing payments.

It’s important to note that some payment methods that do not use physical cards at any time, such as digital wallets like Apple Pay or Google Pay, can still fall into the card not present category as long as the payment information is transmitted remotely. Conversely, if a customer pays with a digital wallet at a business’ physical checkout counter or payment terminal, it is not considered to be a card not present payment even though the payment method doesn’t require a card at all. The term itself is essentially a catch-all for many types of remote payments.

What Are The Benefits Of Card Not Present Payments?

Card not present transactions have many benefits for both customers and businesses alike. For starters, the most significant advantage is the greater level of convenience and flexibility, as transactions can now be processed from anywhere without the need for the merchant and the customer to be near each other. Card not present payments make it just as easy to process a transaction from the other side of the world as it is at the checkout counter.

This leads into the next advantage of card not present payments, which is increased access to a larger customer base. By removing the necessity of being physically present to make a purchase, a much bigger market opens up for the business, and new customer segments can be acquired who were previously unattainable. Expanding your reach to distant customers by accepting card not present payments can drive revenue and grow your business far more rapidly and at a lower cost than investing in additional physical locations.

Card not present transactions often necessitate additional identity verification steps as part of the process, heightening security of the customers personal information and reducing the risks of data theft and transaction fraud. This provides extra peace of mind that payments will go through safely and securely, which can have a profound effect on customer satisfaction and helps to build trust.

How Are Fees Calculated On Card Not Present Payment Processing?

One common question that businesses have related to card not present transactions is how the payment processing fees are calculated, and why they may differ from other payment methods. Many of the aspects that make up payment processing fees are consistent regardless of the payment method in question, however due to the additional identity verification needed to ensure security, card not present processing fees are generally slightly higher.

As with any payment processing method, the amount of behind-the-scenes authorization and steps throughout the verification sequence often determine whether the fees go up or down. Banks, merchant services providers, credit card issuers, and other intermediaries are all part of the total fee makeup, with each one having a different fee structure related to card not present payment processing.

Protecting Against Fraud On Card Not Present Transactions

There are several strategies used to help combat data thieves and fraudsters when it comes to card not present transactions, with many of them simple to implement and highly effective. For example, many companies leverage an automated Address Verification Service (AVS) as part of the transaction process, which strengthens the security of the transaction as the address details provided by the customer are checked against the billing information on file with the card issuer.

Along with address details, verification of the unique ID number found on the back of the credit card is another common method of authenticating identity during a card not present transaction. These are referred to by many similar acronyms, such as CVV, CMID, CID, CVC, for example. Similar to the address verification process, this information is automatically matched against the database of the card issuer to ensure that legitimate transactions are approved, and any discrepancies are flagged accordingly.

To further protect your business and your customers against transaction fraud, it’s critical to follow all the requirements outlined in the Payment Card Industry Data Security Standard (PCI Standards). This set of regulations dictates in specific detail the level of checks and verifications required for each different type of payment. All major credit card issuers use PCI standard, therefore merchants and payment services providers must follow these regulations to the letter.

Tokenization is another important part of security for card not present transactions. Using tokenization, the customer’s payment data is entered directly through a virtual payment terminal, at which time the data becomes encrypted and gets replaced with a unique transaction ID, also known as a registration key. This unique code is only valid for a single merchant, rendering the information unusable by data thieves to create future fraudulent transactions. Tokenization technology is one of the most effective ways to bolster security and reduce risks for all parties involved in the transaction process.

How To Set Up Card Not Present Transactions for Your Business

Preparing your business to securely and efficiently handle card not present transactions is fairly straightforward when you’ve got the right payment processing partner to assist you. At MONEXgroup, we offer a complete range of payment processing solutions for businesses of all types that provide robust security, feature intuitive interfaces, and deliver unparalleled flexibility.

E-Commerce Payment Processing Systems For Card Not Present Transactions

If your business is already equipped with an e-commerce platform, enhancing its capabilities with a more powerful payment portal can make processing card not present transactions easier and more secure. For businesses that do not currently have e-commerce functionality, a new e-tail storefront can be created to expand your reach and enable your business to accept all types of card not present payments. In either case, MONEXgroup delivers an easy-to-use and fully-encrypted payment gateway that will process remote payments quickly and securely.

Using Virtual Terminals To Accept Card Not Present Payments

For ultimate flexibility and convenience, many businesses have realized the benefits of implementing a MONEXgroup virtual terminal solution. These digital payment gateways are accessible through any smartphone, connected tablet, laptop, or PC, making them the perfect secure payment system for businesses who operate remotely, on the road, and in any situation where close physical proximity with customers is not possible. They’re also ideal for telephone or e-mail order desks, seasonal businesses, and recurring payment and subscription business models. Virtual terminals use all the same encryption and security technology as e-commerce payment processing systems and physical POS devices, so you can be confident that customer data will remain safe and protected at all times.

Ensuring Compliance & Enhancing Security For Card Not Present Transactions

Another advantage your business will realize by selecting MONEXgroup as your payment partner will be our commitment to ensuring complete compliance with all PCI standards and adherence to strict transaction security protocols. Our team of payment processing experts and technical support will work with you to implement a card not present transaction solution that is custom-configured specifically for the unique needs of your business. Plus, we’re there to back you up with 24/7/365 customer support and technical help, no matter when you may need it. MONEXgroup is dedicated to providing best-in-class service and support to all our clients, and that’s a promise you can count on.

Accelerate Your Business Growth With Card Not Present Transactions

Being able to accept payments remotely with a secure card not present transaction processing solution can help grow your business and expand your reach to new market segments. Now’s the time to invest in the right remote payment system and make the switch to MONEXgroup, a merchant services provider that will support the growth of your business and accelerate your success.

Contact MONEXgroup today for more information!