The Difference Between Card Present and Card Not Present Transactions

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If you are fond of buying products, you probably might have heard these terms before. As the name suggests, card-present transactions mean that the card is present while making a transaction. At the same time, card not present transactions don’t require the physical presence of the card. In this article, we will be learning the difference between these two types of transactions along with their benefits and drawbacks.

Types of Transactions:

As discussed earlier, the two types of transactions are card present and card not present transactions. Merchants and businesses should know the differences since these can affect the transaction and rates. Let’s kick off by defining the two!

  • Card Present Transactions: All types of transactions that require the card’s physical presence are card-present transaction Now, merely the presence of the card will not declare that it was a card-present transaction. The way you process the card matters more. For example, while making an online payment, you may require the card to add the information, but since it doesn’t require you to use the card physically. In card-present transactions, the information provided on the card is required to access the facility. Let’s take a look at some examples of card-present transactions for a clear understanding:
  • Swiping the card into a card-reading machine. This involves the magnetic strip on your card to process the payment.
  • Swiping the card through a card reader utilizes the card’s EMV chip to process the payment.
  • Using a contactless card-reading device that captures all the required electronic data from the card in its proximity.

In these scenarios, the card’s physical presence is essential as it is utilized to make the transactions possible.

  • Card Not Present Transactions: Transactions that happens without the actual utilization of the card. You may have the card beside you while you enter the information to make the purchase. Since there is no physical proof of whether the card was used or not, it will be considered as a card not present transaction. Using the card is not compulsory. So, if you have saved the card information somewhere, you can add information from there too. Examples for card not present transactions include:
  • Making an online purchase where you enter the payment details on the website.
  • Purchasing a product online from any application via saved payment information.
  • Mailing your payment details to a business by a filled form.
  • Telling your account payment information to a custom representative over a phone call.

Difference Between Card Present and Card Not Present Transaction:

Advantages:

Once you have a clear understanding of these two types of transactions, you can easily understand each of their benefits. This will help you to choose a reliable and best-suited payment method for yourself or your business.

  • Benefits of Card Present Transactions:

The card-present transaction’s significant benefit is that it has lower transaction processing rates than card not present transaction. The reason is that it doesn’t require much effort to process the payment. It is much safer than the card not present transaction since you have the card with you all the time, which makes you accountable for all the transactions.

  • Benefits of Card Not Present Transactions:

There are a lot of benefits of card not present transaction. You don’t have to carry the card with you to make payments. Even if you forgot to bring your card, you could still make the purchases. You can make transactions anytime, anywhere from the comfort of your house or workplace. Many online businesses accept payments online. It works best if you want to order stuff rather than going to the market.

Drawbacks:

  • Disadvantages of Card Present Transaction:

If you forgot to bring your card, you could not make the purchases. In case of any theft or loss of card, you will be unable to make the transaction. Other than that, the person who stole your card can use your card to make purchases. Most of the card reading devices require a PIN to enter after you swipe the card to minimize this error.

  • Disadvantages of Card Not Present Transaction:

The transaction processing rates of card not present purchases are much higher than the card-present transaction. It requires much effort to process the payment. Secondly, there is a risk for misusing the provided information or fraud from the websites or a phone call.

Which One Is A Safer Option? Card Present Transactions vs. Card Not Present Transactions

It is evident that card-present transactions are much safer than card not present transactions. You always have the card with you, making it impossible for anyone to misuse your card information unless they steal it. However, if you opt for a card not present transaction, there is always a chance of mishandling the information. It potentially increases the chance of cybercrime. If you make transactions from an unsecured website or illegal site, you might endanger your amount. Your phone calls can be hacked and heard by someone. Technically, card-present transactions are much safer. However, due to increased online transactions, advanced technology and system prevent this error. They often require a security question answer or a Telephonic PIN code for verification of the client before making a transaction overcall. Websites require you to approve payments via online banking systems, making it impossible for someone to use your data against you.

Bottom Line: Which Transaction Method is Best for You:

Some businesses prefer card-present transactions since they have lower transaction rates, especially if they are making huge transactions. They can save by using their cards. On the plus side, it is less risky. However, it is challenging to keep your card safe or to carry it. In these situations, people prefer card not present transaction. It is convenient for making online payments when buying a product. It completely depends on your comfort what method suits you the best.

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