9. Credit and Debit card

These cards are used to buy goods and services from a shop that uses an EFTPOS terminal (Electronic Funds Transfer at the Point of Sale).

Customer Present

This means the person is physically present to make the purchase.

The old way of using the card was for the magnetic strip on the card to be read by a magnetic card reader machine, then you signed a slip to authorise payment.

This is now becoming obsolete with the advent of Chip and PIN technology. With chip and pin you slot your card into the reader then enter a PIN via the keypad. The system checks

• PIN number matches
• Card has not expired
• Account number of card
• There is enough credit in the account
• Card has not been reported lost or stolen.

The card company also runs fraud detection algorithms to spot dubious transactions. For example if a card is used in one town that is also used in another town a short time later.

Another check is for rapid multiple payments being made, such as going through the till of a supermarket three time in short succession.

A debit card will deduct money directly from the customer's bank account and into the merchant account.

With a credit card, the card supplier is lending you the amount needed to pay for the goods and services, then you pay at least the minimum amount at the end of the month. The credit card company also charges the shop a percentage fee for the transaction.

Customer not present

With this kind of transaction the customer is not physically present at the point of sale. For instance making an online purchase at an ecommerce web site or making a purchase over the telephone.

In this case the transaction includes

• Quoting the long number at the front of the card
• The expiry date
• The last three digits of the security number on the back of the card.

As a further effort to reduce online fraud, credit card companies such as Visa run a separate online credit card check scheme. As soon as the ecommerce web form has been sent to the merchant, another web page appears that asks you to enter your credit card security PIN. This is something that only you and the credit card company knows and so helps validate the purchase. None if this detail goes to the merchant except an indicator that the customer answered correctly.