Payment cards can be classified into following categories
based on the technology used,
Magnetic Stripe
cards:
These cards have only the magnetic stripe tape on the back
side of the card. The embossed magnetic stripe will have Track 1, Track 2 and
Track 3 among which Track 1/Track 2 are only readable and Track 3 is read/writable.
Track 3 is not used by any major card schemes like Visa, Mastercard and Amex in
card payments industry. Track 1 is used majorly in Airline transactions as
mentioned in IATA (International Air Transport Association) standards and Track
2 is used in all retail financial transaction as per ABA (American Bankers
Association) standards.
Track 2 format is as follows,
·
Separator (=)
·
Expiry Date (MMYY)
·
POS Service Code
·
PIN Verification Value
·
Discretionary Data (Ex., CVV, CVC, CAV, etc.)
Track 1 format is as follows,
·
Format code
·
Primary Account Number
·
Separator
·
Cardholder Name
·
Separator
·
Expiry Date
·
POS Service Code
·
PIN Verification Value
·
Discretionary Data
The magnetic stripe readers at the point of sale will read
the track data to make the transactions while swiping the card. The data
present in magnetic stripe is static data and customer will be prompted for PIN
or Signature validation during the transaction. Customer’s signature can be
verified against the signature present in the panel present in the back side of
the card.
EMV Chip cards:
Europay, Mastercard and Visa devised the standards for Chips in payments card industry thus
it is called as EMV Chip cards. The embedded chip can interact with the chip
readers present in POS machines and the transaction data changes dynamically for
every transaction unlike magnetic stripe cards. The dynamic application
cryptogram (ARQC) value generated
during transactions are driven by encryption keys thus makes the chip transactions
more secured and impossible to crack.
The chips are very versatile as there can be multiple
applications installed in a single chip to perform different functionality (Ex.
Credit, Savings and Current accounts in one chip). Track 2 equivalent will be used along with chip data in EMV
transactions in which either CVV or iCVV will be present as discretionary data.
EMV cards also has the magnetic stripe at the back side, the same can be used
if in case the chip is in unreadable condition and the same is called Fallback transaction.
Contactless Magnetic
stripe & Contactless EMV cards:
The contactless cards have an embedded contactless chip
(different from regular EMV chip) capable of communicating with contactless
readers through NFC (Near field communication) technology. The transaction can
be made by just showing the card within the proximity of the reader.
Contactless cards either pass magnetic stripe data or chip data with dCVV
(dynamic Cardholder Verification Value) based on the type of reader it is
interacting with.
Contactless EMV cards can be used in both contactless EMV
& contactless magnetic stripe readers and contactless magnetic stripe cards
can only be used in contactless magnetic stripe readers. These cards can also
be used in EMV contact and magnetic stripe only POS machines.
In United States, most of the merchant issues & accepts
only contactless magnetic stripe payments and rest of the world is migrating
from contact EMV to contactless EMV capability. This is because US migrated to
contactless technology even before the introduction of contactless EMV and so
it will take lot of investment for them to upgrade the technology again.
PayPass and payWave are the contactless technologies adopted
by Mastercard and Visa respectively.
Virtual cards:
In this upcoming future technology, there won’t be any
physical cards issued and the cards will be present in mobile application. The
virtual cards present in the mobile applications can be used like a contactless
card just by tapping the mobile to interact with the POS machine using NFC
technology.
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