8 Best Practices for Card Not Present Transactions

Best Practices for Card

Every customer that comes through your digital doors is going to have different needs from the next person. Depending on their location, their financial position, and whether they’re window-shopping or intent on buying, there are a lot of factors that influence user engagement on your site or sales platform.

A variety of payment options available when making a purchase can be helpful for customers to have. This is particularly in the case where a card isn’t present and this method can also be used in person.

In this guide, we’ll share some of the best practices available for when a card isn’t available and therefore the transaction needs to be made another way. You’ll also learn about the benefits that come with offering alternative payment methods for your customers in 2022.

What does card not present transactions mean?

There will be occasions where payment or perhaps a refund needs to be made but the card that needs to be used isn’t present with the merchant who is taking the payment. This type of payment is typically made remotely, whether that’s over the internet or via phone.

Back in 2019, card not present transactions rose 21% according to a study commissioned by Discover Financial Services’ Pulse Debit Network. This type of payment was found to have grown 10 times more than card payments in the same year.

As a transaction type, it’s one that’s still very much needed and should certainly be prioritized as an option moving forward. While there are many generations using modern payment methods, there’s still always a need for more traditional and alternative options.

8 best practices for cards, not present transactions

What are some of the best practices when it comes to these types of transactions? There are a number of things you can do to avoid chargebacks and provide a seamless experience for every customer who needs this type of transaction.

1.  Ensure the basics are in place

The three pillars of payment processes include presenting information, gathering and protecting cardholder data, and minimizing chargebacks/fees.

When you provide contact information, make sure it’s on every webpage, any catalogs you send out to customers and at the bottom of any and all marketing literature you put out there.

It’s good to provide email confirmations when a sale has been made which includes the information required should a customer have a problem with their purchase. It’s good practice that can help any refunds should they be needed, as is the extra information on how long customers should wait for these refunds to appear in their account.

Displaying a clear policy of how customers get refunds and the costs for returns, can also be good practice.

Gathering card and customer data should be collected in the right manner while abiding by the relevant privacy and data laws in place.

2.  Introduce an address verification to avoid CNP fraud

An address verification service is an automated fraud prevention system that helps to reduce the risks that come with card-not-present transactions. CNP fraud is a major problem that comes with this type of transaction. According to a Juniper Research report, CNP fraud will lead to retailers losing $130 billion in cumulative revenue by 2023.

AVS verifies the cardholder’s billing address to ensure the address being used matches up with the one linked to the card in particular. The authorization request looks at the numeric portion of the address and the ZIP code. This AVS is issued once a person enters their card information or communicates it remotely.

CNP Fraud is something that you want to avoid and prevent from happening at all costs. This guide to CNP fraud is useful to understand the additional measures you can take as a business.

3.  Avoid chargebacks

Chargebacks can mean a loss in sales, which no business wants to experience. As such, it’s a good idea to include any and all business contact information so that customers can get in touch with you directly without having trouble locating a phone number, email or address.

The reason for these chargebacks can often down to three common problems:

  • Authorization not obtained – A chargeback happens due to the card issuer believing that consent wasn’t provided when taking payment or a deposit, for example.
  • Unauthorized use – Chargebacks occur when the individual claims that the card was used without knowledge or permission. A problem that occurs with card fraud is on a regular basis.
  • Recurring transactions – A customer believes they are being charged after they’ve canceled a billing for a repeat subscription or membership.

To avoid chargebacks, you want to mention specific details regarding billing, like order and returns information. All correspondence with customers should also be recorded in some way.

4.  Be compliant with PCI Data Security.

When it comes to the security of your customer’s data, it’s important to comply with PCI data security. This is standard compliance that’s known across all major global card brands like American Express, Visa, and Mastercard, for example.

The basics of PCI should be understood by any business selling online or offline and collecting data. A few of these basics include:

  • Installing and maintaining firewall configuration.
  • Tracking and monitoring cardholder data.
  • Testing security systems and processes.
  • Develop and maintain secure systems and utilize the right applications.
  • Create and maintain an internet/IT security policy.

There can be damage as a result of non-compliance when it comes to PCI security, so it’s good to keep up to date with the requirements.

5.  The use of negative option marketing.

If customers consent in advance to purchase recurring products or services until they cancel, it’s called negative option marketing. This type of marketing means you’ll be on the radar of federal and state-level lawmakers and government regulators.

To avoid the use of negative option marketing, take a look at your advertising methods and be sure to not exaggerate on the truth or create a sense of urgency. Any celebrity endorsements or testimonials from customers should acquire written consent to do so.

6.  Improving billing descriptors.

The billing descriptors, which help users understand payments and where they’ve come from, should be clear and understandable. Having a certain billing descriptor that doesn’t at all relate to the business or product/service they’ve bought is more likely to lead to a refund request.

Billing when used with recurring payments or installments should also be detailed and accurate so that the user is fully aware of what is being taken and at what point they’re being taken too.

The benefits of improving your company practices

Paying attention to the risks of CNP transactions and improving your business’s practices can be beneficial in a number of ways.

6, Increases sales and reduced refunds

Utilizing some of these best practices for CNP transactions is going to help improve the rate of sales and hopefully, reduce refunds. When customer fully understands what they’re spending their money on, especially when it comes to billing descriptors, they’re more likely to make the payment in the first place.

The same goes for refunds, particularly when you’re specific on refund policies and clear about the terms and conditions.

7. Retains customers based on their user experience

Customers are important to impress especially when it comes down to their user experience. User experience is influential in their commitment to the business or brand itself, with 53% of consumers feeling as though brands fail to meet their experience standards.

By offering the best services possible, even with chargebacks and refunds, you’re going to help provide a good experience for the customer.

Even if a product or service didn’t work for them the first time, if they have a good experience, they may end up coming back to give it a second try. User experience is integral to company success, so improving your practices can benefit this.

8. Stronger brand reputation and confidence

As a brand, reputation and customer confidence within your business is a key factors to growth and success. When a brand doesn’t have a glowing reputation, there’s less inclination to make a purchase and request refunds due to the brand’s bad reputation.

It’s important to always work on your practices when it comes to CNP transactions to show that you’re going above and beyond to help provide the best experience possible. The more trust and confidence you can instill in your customers, the better.

Improve your payment processes in 2022

CNP transactions are just one of many payment processes that you may offer as a business and when it comes to financial areas of the company, it’s good to be attentive to improvements. Particularly where security is a concern and sensitive data is involved! Make sure you’re doing the most you can to improve payment processes for your customers and the business in 2022.

Author Bio: Natalie Redman (LinkedIn)

Freelance writer for many clients across multiple industries. Natalie has two years of copywriting experience. Natalie has a wide range of experience in copywriting for web pages for businesses across many industries. She’s also an owner of two blog websites and a Youtube content creator.