What The Numbers On Credit Cards Mean

Have you ever had to type your credit card number into a mobile phone or computer form? If so, you have probably wondered why the number has to be so long. To answer this question, it might help to take a look at what each digit in a typical credit card number actually means.

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Why Do Credit Card Numbers Have 16 Digits?
This 16-digit number was standardized in 1989 by international agreement. This standardization allows people to use many of their cards almost anywhere in the entire world.

This is a simple explanation of the digits:

First digit: The first number identifies the kind of company that issued the card. For example, banks and financial companies usually use 4 or 5. For a couple of common examples, MasterCard uses a 5 and Visa uses a 4.
Second through sixth digit: These numbers are unique identifiers for the card issuer. In some cases, issuers have different identifiers for various lines of business. As an example, your bank might use one number for credit cards and another number for debit cards.
Seventh through fifteenth digit: These digits are used to identify the person who holds the account, but it’s possible that the same person could have a different number for different accounts with the same company.
Sixteenth digit: This is a check digit that’s used to help verify that cards are entered correctly. It’s not used for security because the algorithm that calculates this digit has been published many times and was developed over 50 years ago.
How Do Credit Card Processors Prevent Entry Errors With Credit Cards?
Simple entry errors are very common with these long credit card numbers. It’s pretty easy to make a simple mistake when you have to key in a long credit card number. However, credit card processors usually have some checks in place to catch these before they go through.

For example, some cards also have a credit verification value, or CVV, on the back. This is a three-digit number that provides an extra check. Online transactions usually also require these. Most credit card processors also require the card’s expiration date, the card holder’s name, and the holder’s address to verify the number against.

These checks are mostly to guard against simple mistakes, and they aren’t intended to actually provide a high level of credit card security. It’s still very important for credit card holders and credit card issuers to monitor their accounts to make sure that they haven’t been used by thieves to commit credit card fraud.

Will Chips In Credit Cards Stop Fraud?

In the past few years, companies that issue credit cards have spent hundreds of millions of dollars to give their customers better security with credit cards that contain microchip technology. Likewise, large retailers have invested even more money in the hardware that they need to read these cards. However, some critics don’t believe that the new cards will really eliminate fraud. In fact, they fear that microchips in credit cards will only shift the way that thieves commit credit card fraud.

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Chip and PIN Compared to Chip and Signature Credit Cards
This new technology makes use of a chip that contains the encrypted information that used to be stored in the magnetic strip on the back of the card. Besides the encrypted data in the chip, the machines that read these cards also generate one-time transaction codes. That means criminals can’t just steal the information and embed it into another card.

The first complaint about the new cards is that credit card companies are distributing chip and signature cards. Executives of the Retail Industry Leaders Association say that chip and PIN cards have proven themselves to be more effective. According to critics, signatures are fairly easy to forge. Also, the new readers aren’t able to authenticate signatures. A criminal might not have any way to know a secret PIN code, but he or she might be able to find a signature to copy from another document in a stolen purse or wallet.

The second problem is that neither type of new credit card will help prevent online fraud. Very often, only a credit card number and expiration date are still required for these. That’s why critics fear that the new microchip technology will just shift the way fraud gets done and not eliminate it. In fact, many places that already have this new technology in place have suffered from an increase in Internet fraud.

With present technology, the only way to truly reduce online fraud might be to require consumers to use a personal card reader to make transactions. This suggestion may not be as outlandish as it seems. With new technology, some of these readers are very small and inexpensive. They can work with computers and mobile phones too. In fact, it’s possible that credit card companies will even consider giving them away to their customers in the future.

Credit Card Users Still Aren’t 100 Percent Safe
It still isn’t time to feel totally secure about the safety of credit cards. Retailers, consumers, and credit card companies all take a hit from fraud. It’s still important to monitor credit card transactions and protect credit card information as well as possible.