In my earlier post, I covered Types of Payment Cards. For your information, I have shared the basics of this domain. The Credit card processing domain (PCI – Payment Card Industry) covers debit, credit, prepaid, e-purse, ATM, and POS cards, and associated businesses.
What is the Payment Card Industry?
The payment card industry consists of all the organizations which store, process and transmit cardholder data, most notably for debit cards and credit cards.
The security standards are developed by the Payment Card Industry Security Standards Council which develops the Payment Card Industry Data Security Standards used throughout the industry.
Individual card brands establish compliance requirements that are used by service providers and have their own compliance programs.
Major card brands include American Express, Discover Financial Services, Japan Credit Bureau, MasterCard Worldwide, and Visa International.
Most companies use member banks that connect and accept transactions from the card brands. Not all card brands use member banks, like American Express, these instead act as their own bank.
Security of Cards.
As of 2014, the United States uses a magnetic stripe on a card to process transactions and its security relies on the holder’s signature and visual inspection of the card to check for features such as a hologram.
This system will be outmoded and replaced by EMV in 2015.
EMV (Euro pay Master card and Visa) is a global standard for inter-operation of integrated circuit cards (IC cards or “chip cards”) and IC card capable point of sale (POS) terminals and automated teller machines (ATMs), for authenticating credit and debit card transactions.
It has enhanced security features but is still susceptible to fraud.
Also Read | Take a course on Card Payments
Why people use Credit cards.
A credit card allows its holder to buy goods and services based on the holder’s promise to pay for these goods and services.
Its usage started in the 1920s in the US for selling the fuel to the automobile owners and became usable by the customers when Diners Club was launched in the early 1950s.
In 1958, the Bank of America issued the BankAmericard in the California state and this is known to be the first successful modern credit card. Read more on Deferment in the Credit card business here.
Credit Card Versus Debit Card.
The Debit, credit, and smart-cards are plastic money, which plays the role of medium of payment.
In credit cards, the customer (credit card holder) can avail of the facility of buying goods and services at a Point of Sale (POS) from merchant establishments (provided such arrangements exist) without making a prior payment.
This credit facility is provided by the issuer bank to the customer for a specific period. However, in the case of debit cards, the customer (debit card holder) can buy goods and services by automatically debiting the payments to the card holder’s bank account.
In the case of a credit card, the cardholder uses a credit line by making drawings within a specified or sanctioned limit and makes payment on receiving the bill along with the applicable charges and interests.
In the case of debit cards, the cardholder uses the balance in his / her own bank account and payment is made immediately on purchases. Read more.
Different Payment channels in Cards Payment industry.
A payment channel is basically any way that a customer might make a payment or anywhere that you (as a merchant) might accept a payment:
- Physical POS
- Mobile payments
- Online payments