how do debit/credit cards work?


How can that payment machine scan the card and then how can it pay if there are no electronics in the card?

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What makes you think there’s no electronics in the card? It literally has a contact chip on it.

There’s a very small amount of data stored on your card, basically just an identification key for the bank to figure out who to bill. The terminal reads this, sends the purchase data to the bank, it sends a response back and you verify your identity with the pin. If the pin is correct, the bank bills your account and sends a confirmation to the terminal.

The magstrip/chip in a card don’t know how munch money is in the account. Basically there’s just some identifying ID. Bob12345

The reader then contacts a bank via a network, requests that Bob12345 owes $10. the bank says Ok I know Bob12345 is a valid number, and deducts the amount from that account.

Back in the days before electronic readers, they had physical swipe readers with carbon paper copies. The business would then send those to their bank at the end of the day. There was a credit bureau number they could call to get approval.

There are three primary ways a payment card operates:

1. **Magnetic strip**. This is a short strip of magnetic film built into the card. It has tiny little metal flakes in it that all behave like tiny magnets. When the card was created, all the flakes pointed in the same direction. Then, it was sent through a machine that flipped some of the flakes the opposite way, kind of like one of those [shiny sequin throw pillows]( where if you brush it a certain way, it changes color. The flips and flops of the magnetic signal encode data about the card, kind of like a Morse code. Then, when you swipe your card through a reader, a tiny magnetic detector is put very close to this magnetic strip, and as you pull it through the reader, it senses the flip-flops of the magnetic flakes and decodes the information. (This is similar tech to how cassette tapes and VHS tapes operated, by the way.)

2. **Chip**. These cards are actually built with ultra-thin computers in them! These computers are extremely basic. They have some wires coming in, and some wires coming out. Their one and only job is to be electrically “tickled” on one side, and to “tickle back” on the other side. If you tickle the card in a very specific way, it’s designed to respond in a very specific way. These wires where the tickling is done run to that little shiny metal contact patch on one end of the card. So when you slide it into a chip reader, a part of the reader’s computer will touch the card, providing the tiny computer inside with a little bit of electrical power. It will then interrogate the card by tickling it in that very certain way, and record how the card tickles back. If it responds in the way it is expected to, the transaction is allowed.

3. **NFC tags**. Or in the context of cards, typically just called “”**tap**”. NFC stands for “near-field communication”. These are also tiny computers, just like the the ones in the chip card, and it basically does the same exact thing. (It might even be the same chip if the card has both!) The only difference here is that instead of the card being powered directly by touching physical wires to it, it is wirelessly powered simply by being close enough to the reader. It’s a similar technology going on that allows you to charge your phone with a wireless charging station. The charge station stirs up an electromagnetic field that flows in a very certain way, and your phone, if it’s close enough to the charging station (within a couple centimeters) will be able to tap into the energy of that field and charge its battery. NFC readers work similarly to those charging stations, just much lower-powered–they stir up an eletromagnetic field, and if you bring the NFC tag embedded in your card close enough to that field, the field will be strong enough to wirelessly power the tiny computer in the card. The reader and the card then tickle each other like before with tiny little radio antennas, a bit like ultra short-range Bluetooth.