They aren’t just a random string of digits. Similar to the vehicle identification number on a car, credit card numbers identify certain things about the account.
A code of sorts embedded in the typical 16-digit card number determines where to send the request for payment on a transaction. It’s something the system needs to get right — or risk embarrassing the card holder with an unjustified rejection.
Validating electronic transactions and keeping them all straight is important considering consumers generated some $4.8 trillion worth of electronic payments in 2013.
Start with the first digit. It, and in some cases the second digit, identifies the card network that will carry the transaction. All MasterCards start with a “5,” for example. Visa cards start with a “4.” Discover cards get a “6.”
American Express cards start with “34” or “37,” while the number “7” is reserved for gasoline cards issued by petroleum companies such as Exxon and Mobil.
The next four or five numbers in the series identify which of the some 13,000 financial institutions in the U.S. issued the card, such as Bank of America, JPMorgan Chase or Citibank.
When consumers swipe their cards, a terminal reads the magnetic stripe that stores the complete card number. The transaction first has to be routed through the right network and then to the correct bank for authorization.
“The terminal uses the numbers to figure out where to go,” said Jason Oxman, CEO at the Electronic Transactions Association in Washington, D.C.
Network and financial institution numbers are assigned by the American National Standards Institute, a nonprofit based in Washington, D.C.
The rest of the numbers, up through the last digit, make up the account number specific to the customer holding that card.
Then there’s that last number. Generally, the final digit is a randomly selected number known as a “check digit,” Mr. Oxman said. It helps validate the account to ensure against errors in entering the account number.
It also helps to limit fraud, he said.
Debit cards are coded the same way as credit cards, Mr. Oxman said. Although newer than credit cards, debit cards have steadily increased in popularity. The volume of debit and credit transactions is now about even, he said.
And there’s a lot of plastic out there. U.S. consumers carry some 1 billion credit and debit cards in their wallets, he added.
“Without question, [paying electronically] is consumers’ preferred way to pay.”
Written By: Patricia Sabatini: [email protected] or 412-263-3066.
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