Taking Cards as Payment


With Banks talking about doing away with cheques, people wanting things immediately, and transactions being taken via the worldwide web, plastic cards are being used far more than they ever have been in history.

Cards can be processed in either one of the two following environments:

  • "Cardholder Present". This means that the cardholder(person who is the authorised user of the card) and the card itself are present at the point of sale when the transaction is taken. They can therefore sign for the transaction or enter their PIN.

  • "Cardholder not Present" (also known as CNP). This relates to any method of processing the card where the cardholder and the card are not present at the point of sale. Usually CNP transactions are processed via Mail order, Telephone order or over the World Wide Web.

    • Depending on whether you process via Cardholder present or not present or both, will affect how much you pay and how at risk you are to fraud(chargebacks).

    No matter which environment you process cards through, make sure you fully understand your responsibilties & liabilities when it comes to Card Fraud. Do Not get duped into beleiving that anything is certain.
    If a card is used without the authorised cardholders permission, the onus will be on you to supply as much information as you can to try and prove that the person you supplied was the genuine cardholder. If this fails you will have to pay back the total amount that was taken for that transaction; which is known as a "chargeback".
    If a chargaback was procesed in a not present environment, it will be very unlikely that you will succeed in fighting your corner.

    The UK has now incorperated Chip and PIN which have been very effective in reducing the amount of chargebacks that businesses have received when processing cardholder present transactions but this has also raised other issues. If a card is processed using a chip and pin terminal, the merchant receives a liability shift if the transactions is charged back because the cardholder claims that the transactions was not made or authorised by them. This liability shift means that the card issuer has to pay for the transactions rather than the merchant. Please see the links on the left hand side for more information.