Credit Cards: What do credit card numbers mean?

If you’ve ever had to enter your credit cart manually, be it on your computer or telephone, and made a mistake, no doubt you’ve wondered if perhaps it would get charged to someone else’s account. And maybe you were surprised (or not) to find that of course it didn’t; the automated voice just told you that you had entered an invalid number. But with only 16 digits or fewer to a card, and all of the people in the world that operate on credit, how can the Credit Card Powers That Be prevent number mix ups? Primarily the same way that any organization dealing with long numbers work: they’re broken down into smaller chunks each representing different aspects of what they represent.

The first set of numbers on the card represent the System Number (if it’s a 3 it’s usually American Express, 4 is Visa, 5 is Master Card, and 6 is Discover). The next set of digits represent the Bank Number. The remaining digits – save the last one (more on that below) is the account number.

The major way that credit card companies prevent things like transposing numbers – both on their end and on yours, as well as preventing wayward counterfeits – is by using “check digits.” Check digits are used extensively anytime long strings of numbers that are singular to only one item. An algorithm (a type of mathematical equation) is applied to the card number creating a check digit which is the last number in the sequence. Consider the account number 49927398716
First: Double the value of alternate digits of the primary account number beginning with the second digit from the right.
1×2=2 8×2=16 3×2=6 2×2=4 9×2=18
Next: If any products of step one are double digits, add those until they result in a single digit. (i.e.: 9×2=18 1+8=9)
Then: Add the unused digits with the new result of the numbers directly following it:
4 +(1+8)+ 9 + (4) + 7 + (6) + 9 +(1+6) + 7 + (2) + 6
The total must be a number ending in zero (30, 40, 50, etc.) for the account number to be validated. In this case it’s 70.
So you can see that even in the day and age of computers and scanning it’s actually a lot easier to create bad credit cards than actual functioning ones. You’ve got to have the proper equipment and be quite good at math. But what about identity theft and accepting credit cards on the phone or online, sight unseen? Well, if you haven’t already guessed, the credit card companies have already been hard at work on this one. No one wants to wrack up tons of credit card debt, especially at the hands of persons unknown. Seems with all of ads out there about nasty beer-drinking men and the unknown 20 year-old uber babes running their cards through the roof with bustiers and bikini waxes both American Express and Citibank are will soon be offering what will be know as “disposable” or “perishable” credit card numbers which will expire after only one use thus eliminating the need to prevent identity theft altogether.
According to Alfred F. Kelly, Jr., of American Express, “(Consumer) Fear of having their credit card stolen is the biggest obstacle for a real boom in e-commerce.” With AmEx’s Private Payments Program appeals to the less “tech-savvy” customer – those who already use AmEx’s Blue Card which transfers information to a merchant using a chip reading device attached to a pc.
Citibank offers perishable card numbers, but they can last a couple of months. There are problems though: since they’re only good on the web, you can’t pick up those tickets you ordered at the box office and if you pre-order something online and it doesn’t come in until after the number expires it could be a pain. And you can pretty much forget about paying your monthly bills online. Suddenly the convenience of online payment becomes not so much of a convenience.
But mark my words, they’re working on it. And credit cards do lots of stuff everyday to make sure that you and only you are the one using your card. For instance, if you’ve ordered anything online in the past year or so then you’ve probably been required to flip the card over and give the last three numbers on the signature strip. It’s called the “verification coder,” or “v-code” and it’s so that someone who has just your card number and not your card can’t use it. Online credit card service such as PayPal and BidPay verify your credit cards before accepting them.
Virtually all stores that accept credit cards “swipe” the magnetic strip on the back of cards nowadays as the primary way of processing and credit card companies actually charge the credit card merchant account for all cards that have to be manually entered – even if it’s the fault of the customer or, for that matter, no one at all. Strips can become demagnetized for all sorts of reasons or data can go missing from just hanging out in one’s wallet over time (especially true of those in the contracting trades).
So what’s a consumer to do? It seems like most of us protect ourselves in anyway we can, yet hope that credit card fraud doesn’t happen to us. The evils of identity theft abounds, don’t be a fool: seek out all of the information you can find. It can happen to anyone – anyone who sits back and doesn’t think it can happen to them.

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