Technology is changing the way we make purchases and pay our bills. The world has come a long way, as we have graduated to a cashless mode of payment thanks to the evolution of credit cards. You also know it by the term plastic money.
In straightforward terms, a credit card is a plastic device with specific security features that allow you to pay for your purchases without using cash. The credit card issuer, usually a bank presents you a monthly statement of dues that you pay within a specific date and save interest.
The specific security features on a credit card
The security features on a credit card start with the credit card number. Each card has a unique numbering system. Usually, every card has a 16-digit number. Sometimes, you find cards with 13-digit numbers as well. Let us see what the numbers of the credit card mean.
Visa cards start with the number 4. The next five digits represent the code of the financial institution that issues the card. The account number constitutes the seventh to the twelfth or the fifteenth digit. The final number is a unique checking number.
Master cards start with the number 5. The second through the fifth number is the code of the financial institution. The numbers up to the fifteenth digit constitute the account number whereas the sixteenth number is the checking digit.
The other card issuers such as American Express have their unique numbering methodology.
The sixteen-digit credit card number is an identification number. Every credit card has a unique Card Verification Value number, also known as the CVV number. You find this number printed on the reverse side of your credit card. The Visa and Master Card’ cards have three-digit CVV numbers whereas the American Express credit cards have a four-digit CVV number printed on the front side of the card. The CVV number is handy for making online purchases where you do not have electronic card reading machines.
Apart from the unique card numbering system, you have additional security features that have evolved over the years. We shall look at the technological evolution of these protection features.
The magnetic stripe is the earliest security feature on the credit card. It contains valuable information such as card merchant’s ID, credit card number, expiry date, credit card limit and usage. You find this magnetic strip at the back of the credit card. Swiping this portion of the card on the POS machine enables it to read these details and act accordingly. Some credit cards come with additional security features like providing a PIN code.
The magnetic stripe feature has become an outdated one today because of its vulnerability to cloning. Hence, card issuers have graduated to a comparatively more secure chip and PIN-based security feature.
SIM-type chip and PIN
Compared to the magnetic stripe, the SIM-type chip is secure. This chip uses cryptography to protect your data, as it communicates with the card-reading machine. Users have to enter a unique four-digit PIN to authorize the payment. Most of the POS machines all over the world accept chip payments. The ATMs also have facilities for reading and deciphering the data stored in the chip.
Both the magnetic stripe and the SIM-type chip cards require contact with the card-reading machine to enable its usage. It exposes the card to cloning and duplicating. In spite of having additional features like PIN, the danger of frauds is always present. The contactless payments system can prevent such frauds from taking place. This technological innovation is available in the latest credit cards. There are different types of contactless payments.
Near Field Communication (NFC)
NFC is an advanced technology that allows you to use your smartphones for contactless payments. The merchant establishments have contactless terminals for facilitating this mode of payment. On activation of the NFC chip in your smartphone, it enables the transfer of data between the two devices when you hold your smartphone in proximity with the contactless terminals.
Tap and Go
The modern-day credit cards come with NFC contactless payment technologies like MasterCard PayPass or Visa’s PayWave. All you need to do is to hold your credit card within 4cm of the contactless terminal to approve payments up to $100 without having to enter your PIN.
Such cards come with high-quality encryption features to protect your data. Every transaction generates a unique code to prevent incorrect billing.
Mobile Contactless Payments
Technologies like Apple Pay, Google Pay, and Samsung Pay allow you to make payments at contactless terminals using NFC technology. This technology involves assigning a Device Account Number to your smartphone. A dedicated chip in your phone stores the information that works in combination with a transaction-specific dynamic security code to approve the payment.
This technology allows you to withdraw cash from ATMs without using your card at the machine. You use the appropriate mobile banking application, select the account, and enter the amount you want to withdraw. The app generates a unique code for each transaction that you use at the ATM to withdraw cash.
Use your credit card to make online payments. You can transfer money, view your balance and transaction history, and block your credit card as well online. Setting up automatic payments on your credit card using Google Play account is also possible nowadays.
Combine various cards
This innovative technology is available in the US alone. This technology combines all your cards such as credit cards, debit cards, gift cards, travel cards, and so on into a single plastic card. This card comes with a touchscreen where you can select the card you want to use by swiping right or left. Thus, you use a single card for various purposes. If you lose this card, you have facilities for locking the card using a mobile app. It also allows you to re-sync the information if you recover your card.
We have seen various technological innovations in credit cards over the years. The primary objective is to make your credit card tamper-proof. These advanced technologies help to prevent frauds on your credit cards thereby safeguarding your hard-earned money.