What is it in that tiny yellow-orange Square that makes it possible for millions of them to be put into a machine and Identify its owner? How do the readers work in addition to the cards?
In: Technology
In the old days, you couldn’t even swipe a credit card. The department store would use a press to take an imprint of your card with the card number on it, and then submit their receipts to the bank for processing.
Then came cards with magnetic stripes and card readers hooked up to a telephone line. It was still just reading your cards ID number, but these could charge your account in a couple minutes! When they got connected to the internet this time was reduced to seconds.
The problem here, though, is what happens if someone behind the counter writes down your card number? What if a seller gets hacked and your card number gets stolen?
Along came chip cards. Instead of simply reading your card’s ID number every time, that little gold square generates a new, unique number every time you make a purchase that’s only good for 1 transaction. That way, if someone were to hack in and steal the number, it would already be expired since you used it to buy a cup of coffee. The mathmatical formula used to generate that number is unique to each card and your bank can tell exactly who made the purchase.
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