What characterizes a Card Not Present (CNP) transaction?

A Card Not Present (CNP) transaction is characterized by the cardholder's inability to physically present their card during the transaction. This often occurs in digital commerce environments where purchases are made over the internet or via telephone. In such cases, the cardholder provides their card information, such as the card number and expiration date, without physically showing the card to the merchant.

CNP transactions are primarily associated with online shopping or subscription services where the card is used to authenticate the transaction without requiring the physical card to be presented. Since this method presents certain risks, such as higher rates of fraud, merchants often take additional steps to verify the identity of the cardholder, such as using security codes or address verification.

The other scenarios involving the cardholder presenting their card, the transaction being conducted in person, or the use of only physical cards are not applicable to CNP transactions.