TLDR
In card present (CP) transactions, the customer pays in person with their physical credit card or using a mobile payment solution (Apple Pay, Google Pay, etc.)
Card not present (CNP) transactions — online, phone, payment link — usually carry higher fees and shift fraud liability to the merchant, since the cardholder can't be automatically verified as genuine.
Remote purchase fraud costs UK businesses £399.6 million a year, with cases at an all-time high.
Replacing manual phone entry with payment links reduces both your fraud exposure and your processing cost.
Think about two customers making the same purchase from the same business. The first walks in, taps their card at the counter, and walks out with their order. The second calls ahead, reserves the same item, and pays over the phone. The sale value is identical. The product changes hands the same way.
But from a payments perspective, these are two entirely distinct transactions with different fee structures, fraud liability rules, and settlement timelines.
The first is a card present (CP) transaction. The second is card not present (CNP). Most established local businesses process both every week, but their merchant statement treats them very differently.
For businesses running phone deposits, online orders, and click-and-collect alongside their counter sales, understanding how each transaction type works — and what it actually costs — is a practical margin management question. Both have a place in a healthy revenue mix.
Let's go deeper into these scenarios, to know what each costs, where the risks sit, and how to run them well.
How card present and card not present transactions work
A card present (CP) transaction happens when your customer is standing in front of you — their physical card or mobile wallet interacts directly with your terminal via Chip and PIN or NFC. The bank can verify the cardholder is who they say they are.
A card not present (CNP) transaction happens without that physical contact. Some practical examples:
Online checkouts.
Phone orders where a member of staff keys in the digits.
Invoices paid through a digital payment link.
Recurring subscriptions.
The card never touches your machine, and there is no biometric or chip validation to confirm the person paying is the genuine cardholder.
That single difference shapes how both transaction types perform across your revenue mix. Card present keeps your counter running efficiently, while card not present lets you take orders and deposits anywhere, at any time.
Card Not Present vs Card Present: Key Differences to Monitor
Both transaction types have a role in how you serve your customers. Understanding the variables below will help you make the most of each transaction, while managing potential issues and keeping your cash flow stable.
Fraud Risks
When a card-not-present transaction is disputed as fraudulent, the chargeback process works against you in a way it does not for face-to-face payments. With no chip validation on record, card networks default to the merchant carrying the loss. The genuine cardholder gets their money back, while you might lose both the sale and the goods.
This is not an extreme example. According to the UK Finance Annual Fraud Report 2025, remote purchase fraud (the category that covers all CNP transactions) cost UK businesses £399.6 million in 2024, with the number of occurrences rising 22% year-on-year to 2,586,217.
That case total is the highest ever recorded. Criminals have shifted tactics, using social engineering to extract one-time passcodes from customers and then authenticate fraudulent online transactions.
For a pub taking Christmas party deposits over the phone, or a retailer processing click-and-collect orders, each CNP transaction carries a small but real exposure. The chargebacks that follow cost time and money well beyond the disputed amount, and the dispute process itself favours the cardholder, not the business.
Processing Fees
The fraud risk premium feeds directly into how card networks price CNP transactions. Understanding how card payment fees work across each channel is the starting point for knowing your true cost of acceptance.
When a payment provider bills you for a transaction, the headline rate has three layers:
interchange fees paid to the cardholder's bank,
scheme fees charged by Visa or Mastercard,
and the acquirer's margin.
For CNP transactions, all of them are higher, because each party prices in the elevated fraud risk.
The cost gap widened further after Brexit. Before the UK left the EU, cross-border interchange fees were capped at 0.2% for debit cards and 0.3% for credit cards. Once those caps ceased to apply, major card networks raised their cross-border CNP rates substantially. The Payment Systems Regulator documented increases that took cross-border CNP debit fees to 1.15% and credit fees to 1.5% — a fivefold increase for UK merchants selling to European customers.
Domestic card-not-present rates have not moved to the same degree, but they remain structurally higher than their card-present equivalents. An extra 0.5% to 1% per transaction across a busy phone and online order channel is a consistent drain on margin.
Legacy providers add gateway fees, tokenisation charges, and authorisation surcharges on top of the headline rate, treating each component of the CNP infrastructure as a separate line item. The result is a monthly statement that might be more difficult to interpret and harder to challenge.
Settlement Timing
Card-not-present revenue is inherently treated with greater administrative caution. While modern terminals clear face-to-face payments smoothly, online and phone transactions are far more susceptible to sudden funding delays.
Because providers must actively monitor for elevated fraud risk, CNP transactions face stricter settlement terms, frequently seeing 3-to-5 business day payout delays on international sales, or being subjected to rolling revenue reserves to safeguard the provider against incoming chargeback disputes.
For any business managing cash flow across multiple types of transactions, that gap is worth factoring in when planning supplier payments and operational spending.
How Pay-by-Link Improves Card Not Present Transactions
The highest-risk CNP scenario (and the one that attracts the highest fee bracket) is manually keying card details into a virtual terminal during a phone call. The card number is read aloud, typed by a member of staff, and processed without the customer ever interacting directly with a secure payment environment. Every step in that chain is a fraud exposure point.
There is a straightforward alternative. Rather than asking the customer to read out their card details, pay by link lets you generate a secure payment link and send it to them via SMS or email while they are still on the phone.
The customer completes the transaction on their own device, using their mobile wallet or saved card in a fully secure checkout. The fraud liability profile drops, the compliance burden of handling raw card data disappears, and the experience is smoother for the customer.
Teya's pay-by-link is built directly into the platform: no third-party tool or web store needed. You can set a custom expiry date, personalise the checkout page with your logo and terms, and get an instant notification the moment payment goes through.
Whether you're securing a booking deposit or confirming an advance order, the link takes seconds to send and the payment arrives without the compliance risk of handling card details directly.
For a full breakdown of phone payment best practice, see the guide on taking card payments over the phone.
Making The Most of Both Transaction Types
The businesses that run card not present and card present purchases well treat them as two distinct channels, not a single blended rate.
These are some of the principles that make a practical difference.
Protect Your Counter Margins
For face-to-face sales, keep the checkout experience as frictionless as possible — fast terminal authorisation, contactless where the customer wants it, staff trained on the process. Every second saved at the till is margin protected.
Open CNP Channels With Intent
Before adding a new CNP channel — online orders, phone deposits, click-and-collect — calculate your effective CNP rate: total fees divided by CNP revenue. Know whether the channel is profitable at your current volumes, and what fraud exposure you are accepting.
Replace Manual Entry With Payment Links
Manually keyed phone orders carry the highest fee bracket and the greatest fraud liability of any CNP method. Moving those transactions to payment links reduces both. The customer experience improves too.
Track CP and CNP Separately
If your accounting integration or EPOS data blends all transaction types into a single line, you lose the ability to see where your margin is going.
Teya's platform shows all channels in a single dashboard, so the cost difference between your in-person and remote revenue is visible in real time, not buried in a month-end statement.
Choose a Provider With Consistent, Transparent Pricing
Variable CNP surcharges, hidden gateway fees, and opaque monthly statements are what make remote channels feel unprofitable when they don't have to be.
Knowing exactly what each transaction type costs, before you process it, is the foundation of running both well.
What This Means in Practice
Card-not-present transactions are a growing share of revenue for most established local businesses. Managed well, they are a genuine growth channel, a way to serve customers wherever and whenever they choose to buy, not just when they walk through the door.
The difference comes down to visibility: knowing your rates, tracking your exposure, and using the right tools for each channel.
See how Teya's pricing works across all transaction types.
Manage transactions smoothly with Teya
Team Teya
•