Card-not-present transaction.

In plain English

A card-not-present transaction is any card payment where the physical card is not read by a terminal: online checkouts, phone orders, mail orders, and most recurring billing. Because the merchant cannot verify the chip or the cardholder, fraud risk is higher, so the networks charge higher interchange on these sales. Liability differs too. In a disputed chip transaction at a terminal the loss often sits with the issuer, while in card-not-present fraud the merchant usually absorbs the chargeback. Merchants push back with security codes, address verification, and fraud scoring.

01Why it matters

This is why some sellers add an online surcharge, why a legitimate order gets declined over a mismatched billing address, and why disputing an online charge tends to go the cardholder's way.

02The math, step by step

Say interchange on a 100 dollar sale is 1.65 dollars at a terminal and 2.20 dollars online. That 55 cent gap is 0.55 percent. On 2 million dollars of annual online sales it is 11,000 dollars a year of extra cost for exactly the same revenue.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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