A Closer Look at the Technology Behind Credit Cards

A Closer Look at the Technology Behind Credit Cards

For many of us, credit cards have become an essential tool for paying for bills, groceries, and high-cost items. This isn’t surprising considering the convenience they offer – you don’t have to handle cash, count change, or even money on hand. While credit cards may seem simple, they’re actually a part of a fairly complex system. That system is exactly what we’re going to examine in this post.

The Evolution of Credit Cards

Credit cards first came into play when a prominent executive Frank McNamara forgot his wallet while having dinner at a Manhattan restaurant. The embarrassment of that situation prompted him to return in a year and pay using a cardboard charge card. Not long after, plastic credit cards were introduced.

More and more consumers started paying with credit cards and stores and other establishments started using telephone authorisation to verify funds availability. Shortly after, IBM developed magnetic strip technology, and customer data was incorporated into cards. After that, we saw the introduction of point-of-sale terminals which captured and sent credit card info electronically. Europay, Mastercard, and Visa took the next big step when they replaced magnetic strips with metallic chips. The chip and pin system in the UK was implemented in 2006, marking the latest significant change in the payment process.


The evolution of credit cards eventually allowed us to buy and pay for items and services through the internet. The first online sale took place in 1994 and the rest is history. Today, the majority of brands have online stores and offer payments through credit cards. Stores now allow customers from all parts of the world to make purchases in just a few clicks. Even many online casinos are now accepting credit card, which Sergio Zammit says allows players to use familiar and secure payment methods. Many sites accept credit card deposits, but some add hidden fees or feature insecure platforms. Whatever you’re interested in, you can purchase it online using your credit card.

Recent tech advancements even allow you to pay for products and services on the go using a mobile device. You can even pay for items with cryptocurrencies or play at an anonymous casino without revealing your identity. And at the rate they’re evolving, we can only wonder what the next big thing digital currencies will bring.

The Tech Behind Credit Cards

As mentioned previously, the magnetic strip was the first tech to become a part of plastic credit cards. It’s made of magnetic particles that allow readers to understand the information embedded in the card. When you swipe your card, the reader looks for the direction of the magnetic charges that write the code within the card.

The introduction of the EMV chip made the process both easier and safer. The chip and reader make an encrypted code for every transaction, sharing the data and facilitating the transaction. The codes they create during transactions are dynamic. They always change and are never used twice, keeping the data safe from ever becoming compromised.

We all know that every credit card has its own number. It’s easy to assume that this is an account number, but there’s more behind it. Credit card numbers also signify important information such as the card type, its issuer, and the currency on it. Most of them begin in 4 or 5, denoting the system. Visa credit cards start with 4 while Mastercard credit cards start with 5.

Additionally, every credit card number ends in a check digit, which serves as a way to assess its authenticity, especially when making online purchases.

Lastly, there’s your CID, which is also often referred to as CSC or CVV. This number adds another layer of security to your credit card. It plays an important role in online purchases and other situations when the card is not present. The placement of this number depends on the issuer but it can usually be found on the back of the card.

Most Recent Credit Card Tech Advancements

Credit cards have already gone a long way from the first cardboard charge card McNamara used. With contactless technology, it’s now possible to pay for items and services just by tapping your card on a reader. This proved to be extremely valuable during the COVID-19 pandemic when minimising physical contact was crucial.

But the tech behind credit cards is evolving even further. It’s now incorporating biometrics such as fingerprint scanners into the payment process. This can prove to be crucial when it comes to combating fraud and allowing only the actual cardholder to authorise transactions.

As with everything else, credit cards have also found their way into our mobile devices. Users now have apps that allow them to manage their accounts and track spending. You can even lock your card in just a few taps on the screen without contacting the bank.

With the way credit card technology is advancing, there’s no doubt we’ll see even more advanced changes take place in the near future.

Why not sign up to our weekly newsletter to be sent our top trending articles and latest news?

We don’t spam! Read our privacy policy for more info.