The short answer
A card-present (CP) transaction happens when the customer and their physical card are in the same place as the payment terminal — an EMV chip dip, a contactless tap, a magnetic-stripe swipe, or a signed receipt. A card-not-present (CNP) transaction happens when the card number is entered without the physical card being authenticated at point of sale — e-commerce checkout, phone orders, mail orders, keyed-in terminal entry, subscription billing on file.
Why the distinction matters
The card networks charge CNP transactions more interchange because CNP has higher fraud rates and weaker verification. That gap runs 30-60 basis points on a typical consumer credit card — meaningful at scale. More importantly, CNP transactions shift chargeback liability onto the merchant by default. If a customer disputes a card-present EMV chip transaction, the issuing bank eats the loss. If they dispute a CNP transaction, the merchant eats the loss unless they can produce proof of authentication (3DS, AVS match, signed delivery receipt, etc.).
Interchange numbers to know
- CP debit (post-Durbin regulated): 0.05% + $0.21. The cheapest transaction category in the ecosystem.
- CP credit (plain rewards): 1.35% + $0.10.
- CNP debit: 1.65% + $0.15.
- CNP credit (plain rewards): 1.80% + $0.10.
- CNP credit (premium rewards, corporate): 2.10%-2.70% + $0.10.
- CNP international: add 0.80%-1.50% for cross-border assessments.
What operators need to know
- You can't pick CP if you're e-commerce. Online is CNP by definition. Your job is to minimize the fraud penalty — use AVS, CVV verification, 3DS, and network tokens to push your interchange back down.
- Chargeback liability is the bigger cost. A 50 bps interchange gap is painful. Eating the full transaction amount on a lost CNP chargeback at 1-2% of volume destroys margin at scale. Your compelling-evidence process matters more than your rate.
- Keyed CP is actually CNP. If your retail terminal fails the chip read and the cashier types the number in, the transaction reclassifies as CNP for both interchange and liability purposes. Train for it.
- Recurring billing is CNP forever. Even if the customer's initial transaction was card-present, every subsequent charge on the saved card is CNP. Subscription businesses are ~100% CNP.
- Multi-brand operators usually run 100% CNP. If any of your brands are retail, that mix matters for negotiating blended rates. Call it out to your processor.
Why multi-brand e-commerce operators care
Consolidating CNP volume across brands gives you more data to build a velocity and fraud-filter model than any individual brand would have alone. It also lets multiflow negotiate CNP-optimized pricing on the whole portfolio instead of per-brand. See our industry pages for CNP-specific pricing benchmarks by vertical.