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A credit card is plastic card conforming in size and specifications to the ISO 7810 standard. It is front end part of a financial system that makes up a mode of cashless payment for commercial transactions. A credit card is essentially a debt incurring instrument. The card issuer lends money to the cardholder and pays the merchant directly whenever he makes a purchase on credit. It is differentiated from a charge card which more aptly describes the early frontrunners of the card payment system. Early cards like those of Diners Club and American Express are charge cards as the total amount charged to a card are paid off in their entirely at the time of billing. Credit cards, on the otherhand, allows cardholders to pay only the minimum amount which is often anywhere from 3% to 10% of their total bills for the period. And the card issuer charges interests whenever a part of the total amount is paid. Credit cards allow consumers to “revolve” their balances. That means putting back into the credit limit the payments they have made. Debit cards are often identified as credit cards as well because most of them sport the VISA and MasterCard logos of credit cards. But debit cards are not debt-incurring instruments as their cardholders can only use them if they deposit money into their debit card accounts. So they spend only as much or as little as what they put in. Convenience or transaction fees do get charged when using debit cards. Some debit cards do make spending your own money more expensive. Numbers on the card The 16-digit card number is universal for most of the major credit and debit cards. This numbering scheme is more system dependent than anything. The first 6 digits of the card number in VISA and MasterCard credit cards is called the BIN or Bank Identification Number that identifies the issuing bank of the card. The next nine digits comprise the individual account number with the last digit as a validity check code. An additional set of numbers found at the back of card has been created for added security. This is a set of three numbers called card security codes (CSC) or the card verification value (CVV). The first CVV or CVV1 is encoded on the card’s magnetic strip and the second or CVV2 is shown at the back of the card. The CVV2 is the one often asked by merchants for online transactions. MasterCard and VISA have 3-digit CVV2 while American Express cards have 4 digits. In addition to the 16-digit credit card number and CVV, credit cards also emboss the issue and expiration dates (indicated in month and year. Card security features Apart from the CSC or CVV, issuing bank name or logon, credit card brand owner logo (VISA, MasterCard, Diners Club, etc.) and cardholder name, the credit card contains a host of security features that include the following: - Holographic Image, this was one of the initial attempts to prevent card forgeries
- Cardholder name, with recent developments that include the cardholder picture
- Magnetic Stripe, containing electronic data about the card and cardholder
- Signature Strip, used to verify signed merchant receipts
- EMV microchip, optional recent technical innovation to prevent card forgery
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