Blog Home

Cards and Banks Training

Posted on 11th Feb 2019 11618 views

Cards and Banks Training

From the Card to the Bank

From BINs to brands, from POS terminals to the Bank, cards and card data is traveling from one place to another and everything is working in connection. This connected way of working is vital for your experience in the world of transaction processing. 

We can show you the way card information travels from the terminal to the Bank that issued it, how your balance works and how you find out how much money you have available to spend.

From the Bank to the Merchant

The way back is just as exciting, because it is not the same. It is just as connected and interesting, and just as important for your knowledge. 


When you pay for shopping, the Bank takes money from your card, but how does the money get to the store? Find out about the interesting way the money travels back to the accounts of the stores, who are the parties involved, and who pays for what.

 

path from card to the bank

From the card to the Bank

Whenever we use our bank card, we make a call to the bank so the bank can give its approval for our purchase. This is the general flow, sometimes there are variations, but this is the general way for a card to be authorised.

Let us take an example of a simple flow: I am going to an ATM to withdraw money from my card. Well, we all know that the card does not really have money to withdraw, but it has one important thing: it identifies me, uniquely, at the bank, so the bank can give me money. The card has a unique number called a PAN , usually printed on the front of the cards, and the bank knows to associate that to my account, which is usually a IBAN number, also unique.

The Card in the ATM (Automatic Teller Machine)

The card that I am going to insert into the ATM has some data printed on the front and back. The PAN number on the front, the expiry date, the name of the owner, and the CVC number on the back. This visible information is enough for using it in an online payment transaction.

For the ATM though, this is not enough. So there are 2 more places with data, on the card. There is a magnetic stripe, which works like an old video player with magnetic tape. This data can be read by performing a magnetic swipe. The ATM prefers another location to read data from: the CHIP. It is the most secure location for data, and, unless there is a terrible mechanical failure, the ATM will read the CHIP, by placing some physical contacts on the CHIP pins.

From the CHIP, the ATM reads the card number (PAN), reads the card expiry date(also printed on the card), the card sequence number (used to identify the card in case there are more cards with the same number, for example when they are replaced), some specific EMV tags (like PIN data) and then, using this information, the ATM makes a request to the bank to ask if it can give you the amount you have requested.

For the simplification of the example, we will assume that I am using a card that belongs to bank MegaBank and the ATM belongs to the same bank, which means it is connected by wire to that bank. So The ATM can talk freely to the bank, the bank will check my balance on my account and will then respond to the ATM whether to give me the money or not.

When the bank approves, it saves the transaction to my account and debits my account with that amount. So the money is "taken" from my account.

The Card in the POS (point of Sale)

For the simplicity of the example, let us assume that I am using the same card above, issued by bank MegaBank and I want to purchase some bread at the local market, where there is a POS device that is also connected (and branded) to MegaBank.

The POS device also has a preference to read the CHIP data (if possible), or contactless (will explain in the next paragraph) or, if not, the magnetic stripe, or even an emboss reader, which reads the embossed letters from my card (not in use anymore).

When the POS device is capable of reading the contactless (NFC) data from the card, and the card is capable of contactless reading, they both have the mark/sign for contactless, like the image below. The contactless data also comes from the CHIP, but the CHIP does not tell as much as it would if you used the contacts of the CHIP, which are more secure.

So, the POS device reads my card and also asks the bank to approve the purchase of the goods. If the banks approves, the bank saves the transaction on my account and from that moment, I cannot use that money. Unlike the case of the ATM, where I have received my own money and the transaction is complete, in the case of the POS, the merchant, the owner of the shop, has not yet received any money. My bank just approved that I am "good for the money". That is only half of the story.

The bank clearing system

From the Bank to the Merchant

The POS device is at the shop as a result of a contract between the POS acquiring system (which in this case is the same bank that made the card). So the shop owner, called merchant, made a contract with the bank to be able to accept cards payments, and the bank gave him a POS device, a contract and of course, an account number where money is going to arrive. However, the bank does not make the money transfer from my account to the shop owner's account right away when I buy something, but they wait for a convenient time to perform this sort of operations, like midnight, maybe once every few days. The reason they wait is complex and is a sum a of many aspects. First, they want to wait to make sure you do not change you mind and "reverse" the transaction, also they want to wait for a moment with less traffic so they can perform some accounting. This accounting consists of taking fees for services, like the fee for the transaction, the fee for using the POS, and other fees for other parties which are usually involved in a transaction.

So the key takeaway is that the first part of of a transaction with a card happens in real-time and is called an Authorization. The second part is when the shop owner gets the money from your account and the bank gets the fees, and it is called Clearing.

The Brand of the Card: Visa, MasterCard, Amex, Diners, JCB, UnionPay

The scenario above, where the ATM and the POS device are connected directly to the bank is quite common, but the true power of a Debit or Credit card is the fact that it can be used anywhere,  at other bank's ATMs or POs devices, in another city, in another country on another continent. You want it to work in Hawaii and you want it to work in Bali, no matter if it was issued in Nairobi or Sankt Petersburg. You can imagine this is not an easy task to accomplish, and that is where the Card Brands , or Switches, step in. 

Let us take the example of Visa, which is the biggest card Brand in the industry. In order for my Visa card to be created, my bank, MegaBank, has a partnership with Visa , so they can use the logo on the front of the card. They also buy the BIN: the first 4 digits of the card number. Each of the card brands have a dedicated range, and they all know which range belongs to which brand. That is how the brand is identified.

The Card Brand in action: withdraw money at a foreign ATM

My Visa card is only as powerful as it is known by all the banks and the merchants around the world. In order for this to happen, Visa must connect all the banks and all the merchants in one network.

 So in order to test how good my Visa Card is, I go to an ATM that belongs to a bank where I do not have an account: MiniBank. This ATM is connected to MiniBank just like the ATM above is connected to my bank, MegaBank. So I go to the ATM, stick my card in, and I want to withdraw some cash. What happens next is the same as a domestic ATM, the ATM reads the card details from the CHIP and asks its own bank, MiniBank, for money. But MiniBank does not have any account records for such my card, because 


LinkedIn

Top Read Articles


BIN List & Range for MasterCard, Visa, Amex, Diners, Discover, JCB, CUP
139214 views

Read smart card chip data with APDU commands ISO 7816
57120 views

ISO8583 Response Codes for Transaction processing
49000 views

ISO8583 Message Types for Transaction Processing
26776 views

ISO8583 Processing Codes for Transaction Processing
25674 views

Run the neaPay ISO8583 simulator
19330 views

Deploy, run and generate with neaPay Card Data Generator
19083 views

MCC Codes - Merchant Category Codes to use in ISO8583 Field 18
17783 views

ISO8583 payments message format, programmers guide
16984 views

ISO8583 message: The list of ISO 4217 currency codes for data elements 49 and 52
15302 views

ISO8583 Message Converter JSON and XML interface specification mapping
12321 views

Cards and Banks Training
11619 views

Support for the neaPay products: Authorization, Switch, Converter, Simulator, Issuer
8805 views

Log Files in BASE24 classic
8587 views

Create a new test case in the neaPay ISO8583 simulator Video guide
8353 views

Deploy the neaPay ISO8583 simulator - video guide
7916 views

BASE24 documentation to read
7579 views

BASE24 classic vs BASE24-eps
7550 views

BASE24 classic interview questions
7371 views

Performance testing at 500, 1000 and 1500 TPS
7325 views

Java version for neapay products Simulator Converter Switch Authorization Cards Issuer
7278 views

EMV explained for programmers
6977 views

ISO8583 converter to JSON XML SQL to HTTP host - message flow - video guide - Part.2
6745 views

ISO8583 ATM POS Crypto API integration with exchanges like Coinbase or Binance
6545 views

Adding your own card to the Payments simulator to test your system
6310 views

Connect the neaPay ISO8583 Acquirer simulator to your own host or Issuer
6298 views

ISO8583 converter to JSON XML SQL to HTTP Host - host unavailable - video guide- Part.3
6222 views

Card readers supported by neaPay payments simulator, CHIP and NFC
6219 views

ISO8583 converter to JSON XML SQL to HTTP host - start& run - video guide - Part.1
6181 views

BASE24 classic screens examples explained
6094 views

Enabling traces in the payments simulator
6066 views

Run the neaPay ISO8583 converter to JSON, XML, SQL, in a test environment
6065 views

Changing fields definitions in the ISO8583 simulator and message converter
6062 views

Altering test cases in Excel for the ISO8583 simulator
6054 views

Deploy the neaPay ISO8583 Payments converter in a test environment
6052 views

Sample Recommended design for an Acquirer test cases suite, Scenarios and Regression
6047 views

Load Test enabling and performance testing at 1TPS and 100TPS
6046 views

Run One, Run Scenario, Run All, Run Load in the neaPay ISO8583 Simulator - Use guide
6046 views

How the fingerprint reader works in the ISO8583 payments simulator
6045 views

Regression Testing in 1 click with instant Analytics and CSV report
5956 views

Deploy the neaPay HSM simulator in a test environment
5825 views

BASE24-eps interview questions
5752 views

Deploy the Payments Switch Router in a test environment
5657 views

BASE24 classic ATM configuration Tutorial in ATD and XPNET with examples
5483 views

Add extra custom fields to the ISO8583 simulator
5245 views

BASE24 classic cards configuration tutorial with Examples
5067 views

PCI compliant with neapay switch
4772 views

BASE24-EPS ACI DESKTOP tutorial - Getting started
4724 views

ISO8583 Message Converter to XML SQL CSV interface specification mapping
4412 views

Trace configuration in neaPay Simulator, Converter, Switch, Authorization and Cards Issuer
3844 views

BASE24 classic prefix configuration tutorial CPF with examples
3499 views

BASE24 classic tracing of transactions. Audits, configuration, enabling and opening
3423 views

ACI BASE24 classic automatic extract configuration
3279 views

BASE24 classic Institution configuration Tutorial with example
3084 views

BASE24 classic balance file configuration PBF with example
3060 views

First steps with BASE24 Classic
2785 views

Getting started with using Prognosis for BASE24 and BASE24-eps
2573 views

POS simulator format SPDH HPDH Verifone and custom
2181 views

Iso8583 - articles


Are you ready to start or need help?


Ready to start your next project with us? Give us a call or send us an email and we will get back to you as soon as possible!

Download and Use the software yourself


Download software

Read Documentation and Start guides


Get started