2 Minute Read

In payment processing, the terms "card-present" and "card-not-present" are often used to describe transactions. What's the difference between the two?

Card-present payments occur when a business captures card information using a physical device at the point of sale. Card-not-present payments occur when the buyer is not physically present at the point of sale and transmits their card information a different way. For instance, placing an order online via a shopping cart or providing a card number over the phone both fall into the category of card-not-present transactions.

Card-present transactions can provide financial benefits for merchants, as well as an additional layer of security. This blog details four ways that businesses can accept card-present payments and the benefits associated with each.

1. Dipping a chip (EMV) card into a card terminal

Thanks to the October 2015 liability shift, most payment cards issued in the US are now equipped with EMV (chip card) technology. A chip card is inserted into a payment terminal to authenticate the card and a unique token is created for each transaction. Authenticating via EMV ensures that the card is not fraudulent or counterfeit and can also qualify the merchant for a lower interchange rate.

2. Swiping a card at the payment terminal

Before EMV, payment cards were swiped at card terminals to transmit cardholder information stored on magnetic stripes. However, the static nature of information contained on magnetic stripes made it easy to steal and reproduce for fraudulent transactions. Magnetic stripes are still featured on payment cards, as they can provide an alternative when chip card readers are not working or unavailable. Swiped transactions tend to qualify for less favorable interchange rates and merchants can be liable for specific types of fraud if they swipe a chip card rather than dipping it.

3. Contactless cards

Payment cards are increasingly incorporating technology to complete transactions with the tap of a card. Card terminals equipped with near field communication (NFC) can “read” these cards from a short distance and pull in the relevant account information via radio-frequency identification (RFID) to complete the sale. Contactless cards are gaining popularity with consumers and card issuers as touch-free transactions are mission critical throughout the COVID-19 pandemic and beyond.

4. Digital wallets

Digital wallets like Apple Pay and Google Pay also facilitate card-present payments. They use NFC to transmit payment card information with the added benefit of biometric authentication via a fingerprint or face ID. This added layer of protection ensures that digital wallets are among the most secure ways to pay. And while people automatically think of smartphones as the main conduit to digital wallets, it’s important to note that wearable technology like smartwatches provide convenient access to digital wallets as well.

Does your business have the right card-present payments acceptance solutions for your customers? If not, see what Paystri can do for you.