What is the difference between card-present and card-not-present transactions?
In a card-present transaction, a terminal reads the physical card or a device holding it, by chip or contactless. In a card-not-present transaction, the merchant only receives card details, as in e-commerce, in-app or phone orders. The two differ in authentication, fraud liability, interchange and dispute rules.
In detail
In a card-present (CP) transaction, a terminal reads the physical card or a device holding it, through the chip or the contactless antenna. In a card-not-present (CNP) transaction, the merchant receives only the card details: number, expiry date and security code. E-commerce, in-app payments, phone and mail orders and recurring billing are all card-not-present.
What differs in practice
- Authentication: PIN or device biometric in store; CVV, address checks and 3-D Secure online.
- Fraud liability: mostly the issuer for chip transactions; the merchant by default for remote ones.
- Cost: separate interchange rates, usually higher for card-not-present.
- Disputes: terminal data on one side, authentication and delivery proof on the other.
For PSPs and PayFacs, the practical task is to tag each payment with the right entry mode, because that flag drives pricing, exemptions and dispute rights. Read the full episode, Card-Present vs Card-Not-Present, and see how omnichannel coverage brings both channels onto one platform.