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Q: Is eCommerce (CNP) poised to overtake CP sales?

The rise of ecommerce is difficult to deny. Surely, the global pandemic has accelerated online purchasing, but the trend was already in place before Covid-19. According to the U.S. Department of Commerce, ecommerce was $523B in 2018, $598B in 2019, and $861B in 2020. This means ecommerce grew 44% in 2020, an unprecedented rise.

Of course, these CNP numbers represent more than ecommerce shopping carts, they also relate to recurring billing, phone orders, and website payments. CNP transactions do create more opportunity for undetected fraud, however. This, of course, translates to greater risk and greater expense for banks, cardholders and merchants. While address validation (AV) and card verification code (CVV) codes are usually requested in a CNP environment, they’re no guarantee of no-risk.

It’s not a surprise that card associations and acquirers charge higher fees for CNP transactions to cover the costs of additional verification steps and the added risk in the CNP environment. But what this will mean in terms of the current processes in the payment ecosystem is anyone’s guess.

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