CNP stands for card not present. CNP fees are a type of transaction fee that merchants pay when they accept credit or debit card payments without physically swiping or inserting the card into a card reader. This type of fee is charged because of the increased risk of fraud associated with card-not-present transactions. In this article, we will explore how CNP fees work and why they are important for merchants to understand
What is CNP?
When a customer makes a purchase online or over the phone, the merchant must manually enter the customer’s credit or debit card information into their payment processing system. This process is known as a card-not-present transaction because the merchant does not physically have the card in their possession. Because there is no physical card to verify, there is a higher risk of fraud associated with these types of transactions.
Why are merchants charged a CNP Fee?
To mitigate this risk, card issuers charge CNP fees to merchants. These fees are typically a percentage of the transaction amount, ranging from 1% to 3%, depending on the card issuer and the merchant’s industry. For example, a merchant in the travel industry may pay a higher CNP fee than a merchant in the retail industry because of the higher risk of fraud associated with travel purchases.
How is the fee calculated?
CNP fees are important for merchants to understand because they can have a significant impact on their bottom line. For example, if a merchant processes $100,000 in card-not-present transactions in a month and the CNP fee is 2%, they would pay $2,000 in fees. This can add up quickly, especially for merchants with high transaction volumes.
To minimize CNP fees, merchants can take steps to reduce the risk of fraud associated with card-not-present transactions. One way to do this is to use fraud detection and prevention tools, such as address verification and card security codes. Merchants can also require customers to provide additional verification, such as a phone call or email confirmation, before processing a transaction.
In conclusion, CNP fees are a type of transaction fee that merchants pay when they accept credit or debit card payments without physically swiping or inserting the card into a card reader. These fees are charged because of the increased risk of fraud associated with card-not-present transactions. Merchants can take steps to reduce CNP fees, such as using fraud detection and prevention tools. Please note that this is only some basic information on CNP, for more information please call us at 310.826.7000.