Nowadays, financial world is conquered by information technologies. Paper money is now being replaced by bank cards and apps. In this article, I’m going to explain how do bank cards work.

The birth of cards was caused by magnet stripe technology.

First prototype of magnetic card created in IBM. Source: Wikipedia

In 1969, IBM folk Forrest Harry decided to stick magnetic tape to plastic card base. So, the first card was just a piece of paper with magnet stripe and tape. These stripes can save information, but there were some problems to be solved: sizes and durability.

Modern cards now consist of three tracks of data, even though they look like a single stripe. First and second tracks save PAN(Primary Account Number which usually matches with card number), card’s expiration date, CVV(card verification value) and service code. Service code shows if card is international or national, does it require PIN for all transactions or card should be used only in ATM. Also first track has cardholder’s name. Third track is not used by financial industry but is used in documents and other businesses. For more information, check Wikipedia article: https://en.wikipedia.org/wiki/Magnetic_stripe_card

Magnetic cards can be easily copied whence they are considered insecure. For instance, only-magnetic cards are prohibited in Russia since 2015 and are going to be replaced in Mongolia. According to EMVCo, there are 41.3% of non-EMV cards globally.

EMV card. Source: moneycrashers.com

Next generation cards have chips, so that they cannot be copied and are much more secure than magnetic ones. There cards use EMV technology which means Europay, Mastercard, Visa. These companies created this protocol. All data is stored on ICC(integrated circuit chip). For some PoS and ATMs which currently do not support EMV, cards also store track 1 and track 2 data(MagStripe technology). In EMV, data is read from chip and is transmitted directly to issuer bank, PoS or ATMs have nothing to do with this data. Also this kind of cards is capable of handling offline transactions, it can verify PIN code by itself. This protocol is protected by cryptographic algorithms, such as RSA, DES, 3DES and SHA.

Contactless payment. Source: Visa

Contactless cards are rising in demand all over the world. There cards use NFC(near-field communication) technology, which works in short distances(up to 10cm), to transmit data via EMV protocol.

Thank you reading, I hope that article was interesting for you and you’ve learned something new. If you have questions, feel free to ask me in comments, see you 👋

Born in Russia🇷🇺, living in Ulaanbaatar🇲🇳. Student at Nest Education High School, DevSecOps engineer 👨‍💻