Understanding cardholder-not-present (CNP) transactions

What is a CNP transaction?

Cardholder-not-present (CNP) means that the cardholder is not physically presenting their credit or debit card at the time of the transaction. This commonly occurs for orders that happen remotely, such as over the internet, with e-commerce, or over the phone.

In the RoomRaccoon system, card details are received and encrypted by the payment provider. This method allows you to charge the card for specific scenarios from the reservation:

This type of transaction does not have the same level of security as 3DSecure transactions ensuring the guest's explicit consent and awareness during the transaction, therefore there is a greater risk of fraud, which is why CNP transaction fees are higher. 

The higher processing costs are then passed on to the merchant, which is why CNP transactions are usually more expensive than card-present transactions.

What is a 3DSecure transaction?

A 3DSecure transaction is a form of payment with a technical standard that adds a layer of security to online credit and debit card transactions. To further protect against fraud, 3DS requires customers to complete an additional verification step with their card issuer when they make a payment. They are usually directed to an authentication page on their bank's website and enter a password associated with the card or a code sent to their mobile phone.

When should a CNP transaction be used?

This form of payment should only be used when 3DS is no longer an option, i.e. in cases of no-shows, cancellations or when addressing damages and breakages, assuming there's a pre-signed agreement or documentation of acknowledgement with the guest. It is important that your cancellation & payment conditions are in line with the time of the charge, to ensure that you can defend it in the event of a chargeback requested by the cardholder.

How to accept CNP Transactions securely

RoomRaccoon has multiple payment alternatives with 3DSecure authentication, such as payment request link, pre-payment options via the Booking Engine, or secure transaction requests during online check-in or check-out. These methods offer more security and reduce the likelihood of chargebacks, providing a more reliable transaction experience for both you and your guest.

Good to know

What is a card-not-present fraud: it is a type of credit card fraud in which a fraudster uses someone else's compromised card information to make a remote purchases. Since the card and the cardholder are not physically present (and fraudsters often steal additional information such as the CVV and billing address), it can be difficult for merchants to verify the identity of the shopper.