Technical Specifications and Features of Credit Cards
– Credit cards are typically 85.60 by 53.98 millimeters in size, conforming to the ISO/IEC 7810 ID-1 standard.
– They have rounded corners with a radius of 2.88-3.48 millimeters.
– Most credit cards are made of plastic, but some are made from metal.
– Credit cards have a printed or embossed bank card number complying with the ISO/IEC 7812 numbering standard.
– The card number prefix, known as the Bank Identification Number (BIN), determines the bank to which a credit card number belongs.
– Credit cards have a magnetic stripe conforming to the ISO/IEC 7813.
– Most modern credit cards use smart card technology with a computer chip embedded in them for security.
– Complex smart cards may include peripherals such as a keypad, a display, or a fingerprint sensor.
– Credit cards carry issue and expiration dates, as well as extra codes such as issue numbers and security codes.
– Not all credit cards have the same sets of extra codes or use the same number of digits.
Evolution and Development of Credit Cards
– Early charge coins and cards were made of various materials such as celluloid, copper, aluminum, and steel.
– Charge coins were shaped like coins and had a hole for attaching to a key ring.
– The Charga-Plate, developed in 1928, was an early predecessor of the credit card and used in the U.S. until the late 1950s.
– Charga-Plates were issued by merchants to their regular customers and facilitated back-office bookkeeping.
– In 1934, the Air Travel Card was introduced, allowing passengers to buy now and pay later for airline tickets.
– Diners Club, founded in 1950, produced the first general purpose charge card.
– The entire bill had to be paid with each statement for Diners Club cards.
– Carte Blanche followed Diners Club as a general purpose charge card.
– In 1958, American Express created a worldwide credit card network, initially starting as a charge card.
– BankAmericard, later known as Visa, and Master Charge, later known as Mastercard, were among the first widely accepted credit cards.
– These cards allowed customers to make purchases at a large number of merchants.
– BankAmericard and Master Charge contributed to the growth of credit card usage.
Credit Cards outside North America
– Barclaycard in the UK launched the first credit card outside the US in 1966.
– Credit card adoption was slower in cultures that were more cash-oriented.
– Some countries, like France, adopted chip-based credit cards for anti-fraud measures.
– Debit cards, online banking, ATMs, and mobile banking are more widely used than credit cards in some countries.
– Japan remains a cash-oriented society with limited credit card adoption.
Credit Card Usage and Practices
– Visa, MasterCard, and American Express are card-issuing entities that set transaction terms for merchants, card-issuing banks, and acquiring banks.
– Credit card issuing companies enter into agreements with merchants for them to accept their credit cards.
– Merchants display acceptance marks to indicate which cards they accept.
– Cardholders can make purchases at merchants accepting their card.
– Electronic verification systems allow merchants to verify the validity of the card and the cardholder’s credit.
– Cardholders must pay a defined minimum portion of the amount owed by a due date.
– Credit issuers charge interest on the unpaid balance if the billed amount is not paid in full.
– Late fees or penalties may be imposed if the minimum payment is not made on time.
– Interest charges are waived if the balance is paid in full each month.
– Full interest is charged on the outstanding balance if the total balance is not paid.
– A grace period is the time between the credit card statement date and the payment due date.
– During the grace period, no interest is charged on new purchases if the previous balance is paid in full.
– Cardholder, card-issuing bank, merchant, acquiring bank, and independent sales organization are the parties involved in credit card transactions.
– Authorization, batching, clearing and settlement, funding, and chargebacks are the steps involved in credit card transactions.
– A credit card register is used to track credit card purchases, available credit, and payments.
Credit Card Regulations and Practices
– Credit card holders should not be charged extra fees for transactions.
– Accepted form of identification must be issued a cash advance at any bank.
– A Japanese law enabled credit card cash back in 2010.
– Online shops exploited the cash back system as easy loans with high interest rates.
– The first operator of an online cash back service was charged by the police in 2010.
– Credit card advertising regulations in the U.S. include disclosure requirements.
– Junk mail often consists of credit card offers from lists provided by credit reporting agencies.
– Consumers can opt out of credit card solicitation offers through the Opt Out Pre Screen program.
– Interest charges can be calculated based on the average daily balance and the number of days revolved.
– Multiple balance segments with different interest rates can exist on a credit card.
– Understanding the grace period can help cardholders avoid unnecessary interest charges.
– Negative amortization, where the outstanding balance increases, is banned in the U.S.Sources: https://en.wikipedia.org/wiki/Credit_card
