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We are all experts on how to use a credit card, but how many of us know exactly how a credit card works?
Make-up of a Transaction
You find an item in a store you would like to purchase. You present your credit card to the store clerk who swipes your card through a machine called
credit card reader. The credit card reader contacts VISA or MasterCard computers (depending on the card you have) which then routes the call to the issuing
bank. The issuing bank reviews your information and if the credit card is valid and there are sufficient funds to cover your purchase, the transaction is
authorized. The transaction is concluded by you signing the credit sales slip.
What does the credit card reader do?
The card reader reads the information on your credit card. A card reader is made of a magnetic stripe reader, a keypad and a display screen. The back of a
credit card has a brown or black stripe called a magnetic stripe or magstripe. When a card is swiped, the magnetic stripe reader reads the information
contained on the magnetic stripe. It contains your name, credit card account number, and expiration date. The magnetic stripe does not hold any personal
information such as your birth date or mother’s maiden name.
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The keypad is used to enter the purchase amount and any other information which may be required. When the credit card issuing bank is contacted, the
purchase amount is also sent to ensure you have enough credit on you credit card to cover the purchase.
The display screen has a number of functions, one of which is checks and balances to ensure the amount to be charged on the credit card has been properly
entered. The display screen also shows the merchant if the transaction has been accepted or declined.
Why is my signature needed?
The simple answer is that it guards against fraudulent use. This saves both parties involved a
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