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
the chip contains 2 key pieces of information to identify and verify the owner. it has your account # and the something that basically you can think of as a digital signature (cryptogram). the terminal reads this info and sends a message (typically via 1 or many 3rd parties) to the networks (visa, mc, discover, amex, union pay, etc) , the networks know which bank (or third party) processes your card based on the first six digits of the account # and send the transaction there, the bank (or third party) then looks up your account #, verifies the cryptogram, and a hundred other checks and then either approves or declines the transaction
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