Account card processing validating credit cards

02 Jan

I wrote a piece last month explaining how the payment card industry works.

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1 0 4 6 2 2 0 1 8 8 1 4 6 1 0 4 6 2 2 = 58 Using the total (58) you'd take the next highest number that is evenly divisible by ten and subtract the total from this to produce the proper checksum digit (60 - 58 = 2 in this case).Well, the merchant will have a contract with an acquirer. Let’s use the pricing displayed on that page for Online transactions: 1.99% plus 25c per transaction The Issuer’s Perspective: The Interchange Fee So we know how much money the merchant has paid to the “credit card industry”. there are pages and pages of rates: the interchange fees vary based on whether the card was present or not – and on the type of good or service being bought, whether it was a debit or credit card, whether it was a corporate card, whether it was an international transaction and lots of other criteria… We’ll go with page 2 – “CPS/e-Commerce Basic, Debit” (Card not present).But how is that money allocated between all the participants? And we already know that the merchant only gets .76 of that money (their merchant discount fee was .24, remember? So that means there is 44c left to share between Visa and Elavon.Almost all credit card companies use the same method for generating card numbers.In this method, the last digit of the card number is a checksum.In other words, for this example, we don't add 2 10 ... instead: 2 1 0 4 6 2 2 0 1 8 8 1 4 6 1 0 4 6 2 2 = 60 You may have noticed that the checksum digit (2) is included in the sum.Rather than adding up the other digits and calculating the valid checksum value for comparison, it's included in the total to save some programming steps.The table below shows acceptable values for some of the major credit cards.When actually processing a transaction, you'd also want to check the customer name, expiration date, etc. The code demonstrated here is really just a first step, meant to help the user by checking for typos or invalid characters.[Edit 2013-08-10 : it’s also worth noting that the acquirers and schemes have pretty much fixed-cost infrastructures – unlike issuers, who need to hire customer service and debt collection staff in proportion to number of cards issued.So the schemes and acquirers also benefit disproportionately from rising volumes. but HUGE volume is what enables them to make big profits] [Note: I use blog posts like this to help clarify my own thinking and understanding – as well as to share knowledge…