Card-Not-Present (CNP)
A transaction where the card is not physically presented — online, over the phone, or in-app.
A card-not-present transaction is any payment taken without the physical card, which covers essentially all ecommerce, phone and recurring billing. The card networks treat it as a distinct and higher-risk acceptance environment.
Two consequences follow directly. Interchange is higher than for in-person payments, and liability for fraudulent transactions generally sits with the merchant rather than the issuer. When a card-not-present sale turns out to be fraud, the merchant typically absorbs it.
That liability is why layered verification matters. A card verification code proves the buyer holds the card, address verification checks the billing address against issuer records, and 3-D Secure can shift fraud liability back to the issuer on authenticated transactions. Each is weak alone and considerably stronger combined.
For high-risk merchants this is the default operating environment rather than an edge case, which is why underwriting scrutinises refund policy, delivery evidence and descriptor clarity so closely. Those controls are what keep dispute ratios survivable.