But Were Afraid to Ask
Have you ever wondered what all those features on credit or debit cards are? Despite us rarely leaving home with out them, their ubiquitous global presence and trillions of dollars flowing through their veins, we understand little about those features, including identification numbers, swipe strips and micro processing chips. Seeing as money no longer “makes the world go around,” but rather cards, here are some details on that thin sheet of plastic and its origins.
Starting in the 19th century, folks exchanged goods through credit by using credit coins and charge plates as currency. The use of credit cards originated in America during the 1920s, when firms such as hotels and oil companies began issuing them to their customers. Similar to many other aspects of retailing, their use increased significantly after the 1930s depression and World War II. The first bank card, named Charg-It, began in 1946 in Brooklyn, New York. In 1950 Diners Club introduced the first universal credit card that could be used at a variety of retailers. The American Express credit card began in 1958 and in the following year was the first company to offer cardholders the option of maintaining a revolving balance. Amex cardholders were no longer required to pay off their full bills at the end of each cycle. And it was in 1959 that Amex introduced the first card made of plastic, where previously they were made of cardboard or celluloid. During this period the bank credit-card system began. This system paid the merchants quickly (something they love) by the bank crediting their accounts. The first national bank plan was called BankAmericard, which started on a statewide basis in California in 1959 by Bank of America. The system was licensed in other states starting in 1966 and was renamed Visa in 1976.
The identification numbers on credit and debit cards provide details about the cards. If the first number is three, it is a travel or entertainment card, such as American Express or Diners Club. Amex begins with 37. Carte Blanche and Diners Club start with 38. If it s four, it is Visa. Five is MasterCard and six is Discover Card.
For Amex, digits three and four indicate the type of card and the currency used. Digits five through 11 are the account number. Twelve, 13, and 14 are the card number within the account. And number 15 is a check digit, which verifies the series of numbers is legitimate.
For Visa, digits two through six are the bank number. Seven through 12, or seven though 15, are the account number. And digits 13 or 16 is a check digit.
With MasterCard, digits two and three, two through four, two through five, or two through six are the bank number. The digits after the bank number and up through digit 15 are the account number. Number 16 is a check digit.
The swipe stripe is a magnetic stripe and is often called a magstripe. The magstripe is a film comprised of iron-based magnetic particles, which is very similar to a cassette tape. The magstripe can be “written” because the bar magnets can be magnetized in either a north or south pole direction. A magstripe reader understands the three tracks on the magstripe, which contains the encoded data. If the magnetic magstripe is exposed to another magnet, such as on a refrigerator, the card’s information can be erased.
So-called “smart” cards are just beginning to be used in America, having started in France in 1984. They engage in an innovative application that involves all aspects of cryptology (secret codes). Smart cards have microprocessors built into them. These chips encrypt your personal information and make it more difficult for counterfeiters to reproduce. The user must corroborate his identity to the card each time a transaction is made, in a similar way that a PIN is used with an ATM. The enhanced memory and processing capacity of smart cards allow the cardholder to make purchases from their credit, debit or from a stored account that is re-loadable.