Introduction to credit card

A credit card is small plastic device issued to the user by Banks or credit unions. It allows the user to buy goods, services based on the holder’s promise to pay for these goods and services.

Basics Terminologies.

Customer (Card Holder) :- A person to whom the bank or credit unions give the Credit.

*In most of the banking software a customer is uniquely identified by some numeric value called customer number.

Account :- A label to record an amount of money owned by a customer to the bank.

*In most of the banking software an account is uniquely identified by some value may be numeric or alpha numeric  called Account number.

*A customer can have more the one Accounts.

Card :- A plastic  device used by the customer  to make use of credit for purchases  or withdrawals of cash.

·         In most of the banking software a card is uniquely identified by the numeric value called as Card number.

Credit limit :- The Maximum amount of credit that the Bank or Credit unions will extend to a customer.

Open To Buy (OTB) :- The Amount of available credit for the customers account.

Current balance  :- The money which customer owes to the bank that means the amount which customer has used for the current cycle.

Available Credit :- Is the amount calculated as Customers credit limit minus(subtraction of ) current balance and addition of any outstanding amount that have not posted yet.  

Statement Date :- Statement Date is a billing date of customers account, Which list all the

purchases ,transactions and other action made by the customer to his credit account.

Monetary Transaction :- Any transaction which changes the current balance of an account called monetary transaction.(Any purchases, any cash withdrawals)

Non Monetary Transaction :- Any transaction which does update any monetary value on credit account called Non monetary transactions (personal information update like Address change ).

Payment Due Date :-

Minimum payment Due :-

Issuer :- The Bank or credit unions who issue cards (give Credit ) to the Customer.

Acquirer :-  The Bank or (any Credit institution) who own the POS(point of sales ) machine at the merchants end.

Cards Association :-  Cards Association Provides network for processing the cards. Each bank or credit institution who issue the cards or own the POS machine must have the member of Cards association. Example of cards association are VISA ,MASTER Cards, etc.

Chargeback :-  Normally chargeback is raise by card holder or issuer bank ,it’s disagreement of monetary transaction which reflect in customer statement.

Card Transactions Flow :-

The above power point presentation explains the Transaction flow in brief.

In Next few page we will  discus about the details of

How user’s Card get approval real time?

How user’s Open-to-buy effect immediately as he/she swipe the card at the POS?   

How POS valid the Transaction ?

How User’s Transaction interact between Issuer, Acquirer, Cards Association, merchant?

What is the relation between merchant and Acquirer?

What is ONUS and OFFUS Transaction?

what is difference is processing of ONUS and OFFUS Transaction 

How system Post the Transaction to customers Account.
How System identify the ADD ON cards.

How ADDON cards work.

           

Authentication:-

The Process of establishing the  identity of the cardholder is called authentication.

Authentication is the verification of a credit card owner made during a credit card purchase. Following cards details are use for authentication.

Card Number validation :-  Cards Association (Visa/master cards network) identify the Card belong to which issuer by checking IIN or BIN (The first 6 digits of a credit card number are known as the Issuer Identification Number (IIN), previously known as bank identification number (BIN). These identify the institution that issued the card to the card holder.

If the BIN or IIN is invalid Cards association reject the request and Card get decline at the POS. then network transfer rest of the card details to the Issuer bank. Issuer bank validate the PIN and CVV -CVC code and send the response to the Network. 

CVV :- Three-digit value (MasterCard only) calculated from the data

encoded in the stripe using a secure cryptographic process and the issuer’s secret  keys.

CVC :-  Three-digit value (Visa only) calculated from the data encoded in the stripe using a secure cryptographic process and the issuer’s secret keys.

 

  

CVV2  :-  Three-digit value present on the signature panel of the card  . This value is used to validate a card and reduce the potential for frauds. (CVV2 is use only for Visa cards).

CVVC  :-  Three-digit value present on the signature panel of the card . This value is used to validate a card and reduce the potential for frauds. (CVV2 is use only for master cards).

Authorization

After Authentication ,system does some more verification, to response to u r auth Transaction.

1.It check the monetary value for which the card is  swipe at POS.

2.Checks if Acct (Credit card Acct) have any BLOCK CODE on it. (may be if acct is present in collection etc).

Then the Issuer System sends the response to the customers auth Auth

1.Approve.

2.Decline .

3.pickup .

4.refer Back.