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Chapter 2 : Annoying but VERY Important

The Real Cost of Card-Not-Present (CNP) Transactions – UK Guide

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IN THIS LESSON

Not all card payments are created equal. If you take payments over the phone, online, or by mail, you're processing what’s known as Card-Not-Present (CNP) transactions — and they cost more and carry higher risk than standard in-person sales.

In this guide, we explain what CNP payments are, why they cost more, what risks are involved, and how to reduce your exposure to CNP fraud and unnecessary fees.

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  • A CNP transaction is any card payment where the cardholder isn’t physically present, and the card isn’t inserted or tapped into a card machine.

    ✅ Common CNP scenarios include:

    • MOTO payments – Card details taken by phone or post

    • Ecommerce transactions – Online payments via a website

    • Virtual terminals – Used by businesses to manually enter card details

    • Recurring payments – Subscription charges stored on file

    These transactions are processed differently from card-present (CP) transactions, and they come with different rules, risks, and costs.

  • CNP payments are considered higher risk because the cardholder isn’t present to verify their identity using a PIN, contactless tap, or physical card. This means:

    • More chance of fraud (stolen card details)

    • Higher chance of chargebacks (customer disputes)

    • No liability shift protection without 3D Secure or similar security

    As a result, providers charge more to cover that risk.

    📊 Typical CNP fees in the UK:

    Transaction Type - Typical Fee Range

    In-person (Chip & PIN) - 0.3% – 1.5%

    CNP (MOTO or virtual) - 1.5% – 2.5%

    Ecommerce (with 3D Secure) - 1.0% – 2.0%

    High-risk CNP (e.g. travel, adult) - 2.5% – 4.0%

    📌 Tip: Some providers charge a flat premium on all MOTO or online transactions, so it’s worth checking your statement.

  • Card-not-present payments expose your business to more than just higher fees:

    • ❌ Increased fraud risk – especially without security features like 3D Secure

    • ❌ No PIN or cardholder signature – limited evidence to fight chargebacks

    • ❌ More chargebacks – especially if customer claims they didn’t authorise it

    • ❌ Liability is on the merchant unless SCA is correctly applied

    • ❌ Can impact PCI DSS compliance if handled incorrectly

    • Trades and services taking payments by phone

    • Takeaways and restaurants not using card machines

    • Subscription or membership services

    • Wholesalers or B2B firms invoicing with virtual terminals

    • Charities taking donations by phone or form

  • Not necessarily. CNP is essential for many businesses — and often the only option in some industries.

    But you can:

    • Reduce the volume of manual entries or MOTO transactions

    • Switch to secure online platforms with tokenisation and 3D Secure

    • Negotiate better rates if you process lots of low-risk CNP transactions

    • Train staff to spot suspicious payments over the phone

CNP vs Card-Present – Key Differences

How to Protect Your Business When Using CNP Payments

To reduce risk and avoid unnecessary costs:

  • ✅ Use a PCI DSS compliant virtual terminal

  • ✅ If online, make sure you support 3D Secure (SCA compliant)

  • ✅ Always take CVV and full billing details

  • ✅ Be cautious of large or unusual orders — especially first-time buyers

  • ✅ Keep a clear refund and cancellation policy

  • ✅ Avoid storing card data unless using tokenisation or a secure gateway

Final Thoughts

CNP payments are convenient and necessary — but they come at a higher cost and risk than card-present payments. By understanding how CNP works and where the hidden costs lie, you can make smarter decisions, reduce fraud exposure, and ensure you're not overpaying for the way you take payments.

🔍 Compare now or speak to an expert – no pressure, no jargon, just practical advice.