Credit cards have significantly changed how money is spent, and they have given consumers the power to buy goods that they want. People are able to purchase products and services on cards by borrowing money, with the promise that they will be able to pay back in the future, subject to interest charges. They have also allowed consumers to buy goods without being present at a transaction, such as when they buy from an online vendor.
Depending on the company issuing the card, a cardholder may have a grace period where they are not subject to interest charges, providing they pay back the money they have borrowed within an allotted time.
Credit cards are undeniably beneficial, but they can be subject to fraud if cardholders are not careful and do not take the right protective measures. However, card issuers have a number of measures in place to keep users safe. Here are a few credit card features, and their uses.
What is the Card Verification Value (CVV)?
The card verification value (CVV) is a security feature used to help authenticate payments and verify a person’s identity for when a transaction is made without the card being present. The CVV is used when a PIN number cannot be, and is printed on either the front or back of a credit card. There is also an online CVV Shop where you can buy them. CVV codes are typically three digits (American Express uses four), and they were first introduced by MasterCard in 1997.
While useful, the CVV has limitations when it comes to preventing against fraud. Merchants are not legally required to ask for the CVV code, and they do not prevent against phishing scams as users will input this number if they fall for a scam. Since the CVV code is short and easy to remember, writing it down elsewhere and rubbing it off from the card is a good protective measure, as a thief will not be able to access it if they steal the card.
What is a Magnetic Strip?
The magnetic strip, also known as a magstrip, is a band of magnetic material located on the back of a credit card. The strip is made up of small iron-based particles and is used to store personal data. The magnetic strip is often positioned next to the signature strip.
Credit card numbers, expiry dates and credit limits are all stored on the strip. The magnets locate in the strip are magnetized either north or south, allowing each strip to be ‘written’, making it unique. The strip is read when it is swiped through a reader. A card may not be accepted if the strip has been scratched or exposed to other magnets which have erased the information on it. Keeping the card in a sleeve or a wallet helps to protect it.
What is a Bank Identification Number (BIN)?
The first four to six numbers on a credit card are referred to as a bank identification number (BIN). This number is used to determine where a card is issued from. While the term indicates that BINs are used by banks, other institutions are also using the BIN technology – in this case, they are often known as Issuer Identification Numbers (IIN).
Online merchants use BINs to work out whether fraud is being committed. Each bank has a unique BIN which can be looked up to verify transactions. If the cardholder’s location differs from the location the card has been issued from, a transaction may be flagged up for potential fraud.