Card present transactions are when the payment is made in person, and card not present is when the card is not physically present when processing the payment, like when charging a client through your software provider.
Card-present (CP) transactions
Card-present transactions occur when the payment is captured in person using a card reader by swiping or tapping and often entering your PIN. These transactions have much lower processing fees because there is less risk involved. Due to the higher level of security associated with CP transactions, they are classified as having lower fraud or chargeback risks. If you are looking to save more money on credit card processing, it is best to process most of your payments via physical card readers.
Card-not-present (CNP) transactions
With Card-not-present, the credit card information is manually processed via online payments or over the phone, for example. Card-not-present transactions are much more convenient for dog walkers and pet sitters, but they come with higher processing costs. CNP transactions have a higher risk of fraud. These payments have fewer security measures as they are not as easily verified. Because of this increased risk of fraud and chargebacks, CNP transactions are more expensive to process.
Pricing Examples between CP and CNP
A payment processor may charge 2.5% + $0.10 for each card-present transaction but charge 3.5% + $0.15 for every card-not-present transaction. If your average business transaction is $50, you will save $0.50 per transaction using card-present methods like card readers.
Some of the larger payment processors offer one standard price, CNP or CP. This may seem easy and convenient, but using a payment processor that offers different pricing for CNP and CP can save you money, especially if you take payments in person via a card reader. In addition, did you know processing fees for Visa, Mastercard, and American Express are different? Get a quote today to see how you can start saving money on credit card processing fees!