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Card-Not-Present Fraud

Reduce CNP fraud and improve your bottom line. 

CNP fraud is growing, and merchants are likely liable.

Card-not-present (CNP) fraud has been increasing with the huge uptick of ecommerce and mobile payments, as merchants increasingly provide their customers with low-contact and convenient payment options. In fact, the global mobile payment market is predicted to grow 30% annually from 2020 to 2027.  

By the end of 2023, CNP fraud losses are expected to comprise 73% of card payment fraud, reaching a projected $10.2 billion by 2024. Because merchants are typically liable for CNP transactions reported as fraud, they must find solutions to prevent CNP fraud. 

Person shopping online

What is CNP fraud? 

CNP fraud refers to fraud that happens on transactions where the physical payment card was not presented to the merchant. This is most common with online purchases or contactless payments facilitated through mobile apps, where the merchant never physically interacts with the card or cardholders. 

What types of transactions cause CNP fraud? 

With digital technology blurring the line between what is an in-person vs. online purchases, businesses can find themselves processing CNP transactions even when they might not expect it. It’s important to note that even if a purchase is made in person, it’s not always considered card-present. That’s because as more merchants look to provide omnichannel shopping experiences, they are increasingly offering more digital, mobile device-based payment options. 

Consider the scenarios in below. Even though a customer performs a portion—if not all—of their purchase at a physical location, it’s likely categorized as a CNP purchase because the payment happened through an ecommerce channel such as a mobile app.

Buy online, pick up in store (or curbside) 

These are purchases made online or over a mobile device in which the goods are picked up in person at the business.

Mobile in-app

These are purchases made within a mobile app, often allowing customers to bypass the usual checkout line to pick up their order. 

QR codes

Customers at the business location use their smartphone to scan a unique code, directing them to a website where they can place their order and pay.

How can you prevent CNP fraud and chargebacks?

Businesses and merchants alike are subject to the impacts of CNP fraud. The best way to prevent this for all is to use a multilayered approach that can resolve fraud, disputes and chargebacks at every touch point. 


Merchants need to prevent as much fraud and chargebacks as possible to help improve their bottom line. This is best handled by a digital-first approach that can prevent and resolve disputes and chargebacks at key moments through the post-purchase journey. 

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Issuers are often the first point of contact when fraud or disputes occur. Collaborating to share dispute information with merchants and receive more detailed purchase information to sort out true fraud from first-party fraud can help issuers more effectively reduce disputes and chargebacks. 

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Fintech partners are uniquely positioned to help reduce CNP fraud. They can act as a conduit to share vital dispute and purchase data that can reduce fraud while also creating a better experience for their customers and the people they serve. 

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Find out about an innovative solution that can prevent chargebacks

Ethoca Alerts helped one merchant prevent $15.5M in fraud—in just one year. Learn how one home improvement retailer re-tooled its chargeback strategy and prevented millions of dollars in losses.

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How Ethoca can help

Your defence against CNP fraud. Powered by the ever-growing Ethoca Network, our solutions provide rich intelligence throughout the purchase journey to close costly communication gaps in the payments ecosystem. For the first time, fraud, customer dispute and purchase insights are available and actionable in real time. That means fewer chargebacks, less purchase confusion and better customer experiences.

Ethoca Consumer Clarity™

Provides recognisable purchase information to issuers and to cardholders through their bank app. The ability to easily recognise purchases means fewer disputes caused by transaction confusion, improving the overall customer experience and reducing first-party fraud and chargeback costs.

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Ethoca Alerts

Connects issuers, acquirers and merchants to share fraud and dispute data, speeding up the dispute resolution process. By receiving real-time fraud alerts, merchants can quickly identify fraud, stop order fulfillment, issue refunds, and prevent the need for chargebacks.

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Need more information?

We’ve answered some of the most common questions about card-not-present fraud.


What is an example of CNP fraud?

Card-not-present fraud is typically any transaction that is made where the cardholder and their physical (or mobile) payment card are not present. This is often digital purchases online or through mobile apps, where a cardholder enters their payment details to be processed instead of tapping, using chip and PIN or swiping their card at a physical payment terminal.

How do I know if a mobile transaction is considered CNP or not?

Here’s a look at the difference between card-present and CNP transactions:

  • Card-present mobile payment transactions: Card-present mobile transactions include any time a customer is at a physical location and their mobile wallet needs to be “read” by the merchant’s NFC-enabled payment terminal. Most digital wallets traditionally work this way. So, if the customer makes their purchase in-store using a mobile wallet at the card reader, that’s most likely a card-present transaction.
  • Card-not-present mobile payment transactions: Anytime a mobile payment does not require a card reader, it’s likely a card-not-present transaction. This could be a customer paying for their coffee using the retailer’s mobile app or buying a new shirt online that they’ll pick up at the store later. Whether they completed the ecommerce purchase from home or while in the store itself, these are likely CNP transactions. 

Who is liable for CNP fraud?

The growth of mobile payments matters to merchants because of a liability shift that occurs if they’re considered CNP transactions. While card issuers are often liable for card-present fraud, merchants are typically liable for covering the cost of any CNP fraud, including the processing fees.

Are CNP chargebacks different from card-present chargebacks?

Merchants are typically liable for CNP transactions reported as fraud, but the chargeback process largely remains the same. For card-present transactions, there is normally stronger proof that a cardholder made the purchase, such as signing or using chip-and-PIN technology. For card-not-present transactions such as ecommerce, it may be harder to prove the true authorized cardholder made their purchase.

Should I fight a CNP chargeback?

When a customer disputes a purchase on their debit or credit card—triggering the chargeback process—the merchant can try to stop the chargeback by proving the dispute is unwarranted. To learn more about the chargeback process, and whether or not you should dispute a chargeback, check out this blog post.

Do 3D Secure transactions helps reduce CNP fraud?

Yes, 3D Secure helps businesses reduce CNP fraud. According to Entrust, “3D Secure or 3-DS is a payment card industry specification designed to secure CNP transactions while ensuring a positive customer experience.” More specifically, it asks users to “step-up authenticiation” before completing their purchase since it helps validate an authorized cardholder’s identity online thereby increasing card security for the cardholder and helping issuers and businesses migrate risk with fraud related losses.