Credit Card (Kreditkarte)

Posted Fri, 09/11/2009 - 23:01 by lars.wittbecker@eufh

Credit Card

 

A credit card is a plastic card that one can pay goods and services with. Like most other plastic cards its size is according to ISO 7810. The advantage of a credit card is, that in comparison to a cash card, the money spent is not debited immediately from the bank account. The owner of the credit card receives an invoice at the end of the month and everything is paid at one time. This equals a credit given by a bank, what led to the name of the credit card.

 

The card itself

As said before, credit cards have a standard size according to ISO 7810. Most credits cards are produced of polyvinyl chloride (PVC). As one could see, most data on the credit card's front are embossed. These data are the name of the cardholder, the time period during which the card is valid and the card number.

The card number normally consists of 16 numbers, the only exception are cards of American Express, which only have 15 numbers. All of these numbers have a special meaning:

  • The first 4 numbers are the identification numbers of the credit card company
  • The fifth number identifies the type of credit card (e.g.: gold, platin)
  • The sixth number shows if it is a partnercard, a company card or something similar

--> These first 6 numbers are the Bank Identification number (BIN-Code)

  • The last 10 numbers are the numbers of the bank account, the last numer of these 10 is an error checking number.

The card owner has to sign the card on the back. Also on the back there is a number that is neccessary for the use via  telephone or internet but this will be explained later.

 

History

The credit card was invented in the USA in 1894. In the beginning they were given out by hotels to their customers as an instrument of customer loyalty. About two decades later, in the 1920's, oil-companies and department stores adopted the idea. Another 20 years later reataurants and airlines followed in 1945. But the use of all these credit cards was reduced to the companies that had given them out.

Credit cards as they are known today (General Purpose Credit Cards) were invented in the 1950's, again in the USA. All creditworthy customers of a bank could get hold of a credit card and use them in all stores that were partners of this special bank. The first General Purpose Credit Card was Diners Club in 1950. The idea of giving credit cards to customers spread fast among the US-Banks and by the year 1968 10% of them had own credit card programms. Because there were so many different programms banks quickly realized that they had to cooperate, first regional, later national and in the end international. This is how MasterCard and Visa came into being. 

 

Credit card companies

The are four large international credit card companies today:

 

MasterCard an Visa are the market leaders. There are 23 mio. locations worldwide where these two cards could are accepted and 800,000 automated teller machines (ATMs) where one could withdraw money. In Germany there are 50,000 ATMs and 400,000 locations accepting these two credit cards.

 

Fees

Retailers who accept credit cards as form of payment have to pay fees. Aaccording to branch and the volume of transaction  these fees normally range from 3% and 5%, but there are exceptions from 1% to 10%. In addition to this there is a fix charge for every transaction of 10 to 25 cents as well as monthly charges to be a partner of the system. In return, the credit card companies take the commitment for all payments, this means they bear all risks as long as the retailer acts responsible. 

 

Use of credit cards in internet shops

Payment via credit card is widespread in e-commerce. This use of a credit card without signing the bill is called mail- oder telephone-oder. In order to pay for an online-purchase via credit card one has to give the following data to the retailer:

  • The name of the cardholder
  • The number of the credit card
  • The expiration date
  • The security number that is printed on the back of the card (this number is neccessary to ensure that the person who is paying is really in hold of the card he uses)

Payment is finished after the buyer has given this data. Because of new security systems like MasterCard Secure Code or Verified by Visa the retailer does not have to worry about security as the buyer has to verify himself via password to minimize the risk of credit card misusage.

 

Copyright: Lars Wittbecker

Quellen:

http://mediakey.dk/~cc/bank-identification-number-bin-database/

http://www.kreditkarten-plan.de/

http://de.wikipedia.org/wiki/Kreditkarte

https://www.bs-card-service.com/nl/e-commerce-mailorder-onlinezahlung/be...