Define: Card Not Present

A Card Not Present transaction refers to a payment made without physically presenting the payment card to the merchant. This typically occurs in online or over-the-phone transactions.

Yes, CNP transactions are legal as long as they comply with applicable laws and regulations governing electronic payments and consumer protection.

CNP transactions carry a higher risk of fraud compared to in-person transactions. This is because the merchant cannot physically verify the cardholder’s identity or the authenticity of the payment card.

Merchants can implement various security measures, such as using secure payment gateways, requiring CVV verification, and implementing fraud detection systems, to minimize the risks associated with CNP transactions.

Merchants have the right to refuse CNP transactions if they have valid reasons to suspect fraud or if they are unable to verify the cardholder’s identity. However, they must comply with anti-discrimination laws and cannot refuse CNP transactions based on protected characteristics.

Merchants have a legal obligation to protect customer data, comply with payment card industry standards, and ensure secure transmission and storage of cardholder information. They must also provide clear and accurate transaction records to customers.

Cardholders are generally protected from liability for unauthorized CNP transactions under federal law, such as the Electronic Fund Transfer Act (EFTA) and the Fair Credit Billing Act (FCBA). However, they may be liable for a portion of the unauthorized charges if they fail to promptly report the loss or theft of their payment card.

Merchants are generally prohibited from charging additional fees specifically for CNP transactions under the rules of major card networks, such as Visa and Mastercard. However, they may impose reasonable fees for processing online or phone orders, as long as they apply equally to all payment methods.

While there are no specific regulations solely dedicated to CNP transactions, various laws and regulations, such as the Payment Card Industry Data Security Standard (PCI DSS), the EFTA, and the FCBA, apply to CNP transactions to ensure consumer protection and data security.