Guest post by Chase Paymentech, providing thousands of Verizon customers’ best-in-class debit and credit card processing through Verizon Merchant Services.
The global payments landscape is constantly evolving and so is the way your customers pay for their purchases. Technologically savvy and constantly on the go, today’s consumer is more likely to tap and go than to swipe and sign. So what does this mean to the long-standing card-present and card-not-present concepts we have always used as our dominant payment differentiator? A lot!
The concept of using card-present (CP) and card-not-present (CNP) as a criterion emerged in the early days of the card industry as a means of differentiating interchange rates based on the transaction type and associated risk. Just to review: Interchange is the percentage of any individual transaction that is sent back to the issuer to cover processing, fraud and other costs. And since CNP transactions are often considered to be riskier than CP transactions (because the card cannot be verified as present at the time of checkout), CP rates are typically 50 basis points lower than CNP1.
And when it comes to the reason why? It’s because CP transactions allow you to do the following (all of which enable you to verify the legitimacy of the sale):
However, as the payments landscape continues to introduce emerging technologies to our point-of-sale options, the distinction between CP and CNP transactions continues to blur. Case in point: Near Field Communication (NFC) and mobile wallets. With NFC, a stream of data can be sent from a mobile device to a point-of-sale reader that has the ability to authenticate the device. And these NFC devices, using the standards developed by Visa and MasterCard, qualify for CP rates when used at brick-and-mortar locations – even if there is no “card” present at the time of purchase.
And in many cases, these emerging technologies are thought to be equal to (if not superior to) using a card to authenticate the cardholder. So is it easier to authenticate yourself with your phone or your credit card? Many say the former as opposed to the latter2.
Not to mention, many of today’s ecommerce merchants have fraud best practices in place that minimize their risk and consequently eliminate much of the differences between selling online and in store. So what does the future look like? Stay tuned to our next blog to find out.
For More information, call Chase Paymentech, proud Verizon partner at 800.600.8351. Chase Paymentech has been processing payments for over 30 years and has powered Verizon Merchant Services for five years. To get insights on how new research, technologies and regulations in debit and credit card payment processing can help grow any business in this sluggish economy, watch this free webinar, presented by Verizon.
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