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Prior to 1958 there were no universal
credit cards. Each merchant made their own
credit-granting decisions and issued their own
charge cards. Actually, it was rare that a
card was even issued in the early days. Other than
oil companies, most merchants kept paper files
that listed your balance and your
credit limit.
All of that changed in 1958 when Bank of America
revolutionized the consumer credit industry by
issuing their blue, white, and gold BankAmericard.
Bank Of America literally mailed credit cards off
to millions of consumers, no application required.
The idea took off and today, BankAmericard (now
called VISA) holders number in the millions and VISA
cards are issued by over 13000 banks around the
world.
How VISA Cards Work
Every VISA card is embossed with a unique set of
numbers that separate that card from every other
VISA card in circulation. The numbers are not
random. Here's how they work:
Digit number one is not significant.
Digits two through six identify the bank that
issued the VISA card.
Digits seven through twelve or fifteen, depending
upon the issuer, represents the account number.
The remaining digits are called "check digits".
These check digits are automatically calculated by
a mathematical formula that uses all of the other
card's numbers as a key. The check digit is a
security device that helps to ensure that the card
is not counterfeit with a fictitious number.
The VISA Card "Mag Stripe"
The black strip on the back of the VISA card is a
specially-encoded magnetic tape that can be read
by the card readers at the checkout stand.
All mag stripes contain the account number as a
minimum. Different VISA card issuers add their own
additional information to the stripe. This may
include your full name, ATM "Fast Cash"
preferences and more.
How The Merchant Gets Paid
When you use your VISA card to make a purchase,
the merchant's computer payment system contacts
the VISA network and transmits the information
that's encoded on your card's mag stripe along
with the amount of your purchase.
The VISA network contacts the computer operated by
the card issuer to check your available balance
(called your "open to buy"). If you have enough
open to buy to cover the purchase, your balance is
adjusted to reflect the purchase and the
merchant's bank account is credited with the
amount you spent less a
service charge.
All of this happens in just seconds and you can
tuck your VISA card back into your wallet and keep
on shopping!
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