MasterCard-Visa.com
Credit Cards 101, Basic online information:
There are 4 basic parts of a typical credit card transaction. First, the "cardholder,"
who is the consumer, wants to make a purchase. The consumer purchases from a
"merchant."
Credit cards are given out by a "card issuer," This could be
any bank, department store,
or oil company. Any company organization that issues credit cards and is responsible
for billing
the cardholder is the card issuer. An "acquirer"
(that's us), decides whether to approve the purchase,
and then guarantees payment to the merchant. For example, when a cashier at
a business
takes a credit card and runs it through a card reader, the information on the
card is passed
on to us, then we decide whether or not to approve the purchase.
And the numbers
on a credit card? Visa and MasterCard, for example, mostly
have 16-digit card numbers while American Express cards have 15 digits.
In all cases, the first
digit represents the credit card brand. If your credit card number starts
with a 4, you have a Visa card. If it begins with 51, 52, 53, 54, or 55 it's
MasterCard. American
Express cards start off with either 34 or 37. On Visa cards the second through
sixth number are
for the bank that issued the card. Numbers seven through fifteen represent a
personal
account number, or PAN. MasterCard numbers are similar. American Express cards
have no
bank numbers, and digits five through eleven are the account number.
On most credit cards, the
final number is a check sum digit, which is used when someone
wants to verify the validity of a string of numbers. Check sum digits are determined
by running the
number string through a mathematical operation; the resulting number is then
tacked on at the
end. One part of the authorization process involves running that formula and
making sure that
the check sum digit at the end of your credit card makes sense. If everything
matches up, the
acquirer (remember, that's us) will know it's a valid combination.
When a merchant
passes a card through a card reader, it automatically dials a telephone number
connected to us. The first thing we do is make sure there is nothing strange
about the transaction. For instance, that the expiration date hasn't passed,
that the amount
of the transaction is within reason for the merchant that has submitted it,
and that the card
number itself meets all the rules of valid credit card numbers (the check sum
digits).
What happens next depends
on the size of the transaction. If the bill falls below a limit set jointly
by our company and yours, we compare the card number against a database of
known bad cards and then do a velocity file check, which checks that someone
isn't running
around piling up a suspicious number of charges in a suspiciously short time
period on that
one card. If all requirements are met, we approve the transaction.
If a bill exceeds the limit
set by the card issuer — or if the transaction doesn't pass all of the
our checks and tests — then we connect directly to the issuer for further
validation. This lets the issuer do an up-to-date scan of a card holder's existing
account balance
and even decide whether to extend credit limit on the spot. In some cases,
the merchant will be notified to contact the issuer directly.
We hope that this small
introduction to credit cards helped you understand the process
a little better.
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