This purpose of this sections is to give some domain knowledge to people not familiar with the payment domain.
Card Present vs. Card Not Present
A Merchant interfaces with a card holder and submits a Card Present Transaction request whilst the card holder is waiting, and the card holder authenticates the transaction (typically via signature or PIN entry). In the event of a dispute of the transaction, the merchant must prove that the card holder authorized it, else merchant is liable to refund the card holder.
A Merchant submits a Card Not Present Transaction according to previously arranged agreement with a card holder. The card holder is not present to authenticate the transaction. In the event of a dispute on the transaction, the merchant must prove the card holder authorized it, else the merchant is liable for refunding the card holder.
Fully 3D Secure transactions are Card not present transactions with the protection of a Card present transaction.4.
Online vs. Offline Transactions
- When a Merchant submits an Online Transaction, s/he expects a response while the card holder is waiting. An Online Transaction can be a Card Present or a Card Not Present transaction. The result of such a transaction needs to be responded to as soon as possible.
- When a Merchant submits an Offline Transaction (typically with Batch of Transactions), the merchant requires a response for the transaction within the immediate future. The time frame of such transactions is they should preferably be settled before the current cycle cut off. A Batch Transaction can only be a Card Not Present transaction.
- PIN based cards can only be processed within online transactions. (It is possible for the card holder's chip card to verify the card holder's PIN locally at the card acceptance device, using the on-board cryptography of the card and the PED).
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