Credit Card Processing: The History of the Magnetic Stripe

For 40 years, the magnetic stripe has served the credit card processing industry well. It revolutionized shoppers’ buying habits, set the standard for sharing personal information and made real-time processing possible. Already replaced by EMV technology worldwide, the mag stripe is about to be phased out in the U.S. as well. Before it disappears, let’s take a look back at its history.

Originally used on paper tickets on the London Underground, the mag stripe concept was borrowed by IBM to develop database access for the professional computers it was developing in the mid-1950s. It was also quickly adopted by airlines, who used it to streamline the ticket purchasing/check-in/boarding process, and by banks, who were experimenting with early ATMs.

But the biggest impetus for the development of mag stripe technology was a rise in credit card fraud during the 1960s. In those early days of credit card processing, merchants would use a flatbed “knucklebuster” machine to make an imprint of a card on a multi-sheet receipt, which then had to be physically transported to the bank where the account number would be checked against a list of known fraudulent accounts. It was a time-consuming process that often took days to complete and was highly susceptible to fraud.

The mag stripe was first tested in a joint pilot project by American Express®, American Airlines and IBM at O’Hare Airport in Chicago in 1970. Three years later it was put to work on bank cards and employee ID cards. MasterCard and Visa adopted the mag stripe in 1980 after production costs dropped from about $2 per card to just a nickel per card.

The mag stripe revolutionized credit card processing, contributing to an increase in U.S. credit card balances from $9 billion in 1973 to $796 by 2011, according to Federal Reserve statistics. This simple-yet-complicated idea allows cards to be swiped through an electronic reader in a terminal that encrypts and sends the data to the issuing bank. Once the bank verifies that the cardholder has sufficient credit to cover the purchase, it sends an authorization to the merchant, who completes the transaction – all within seconds!

As part of its 100th anniversary celebration in 2011, IBM included the mag stripe as one of its top 100 contributions to society, a list that also includes the Selectric typewriter, IBM punched card, personal computer and the rise of the Internet.

The mag stripe has truly been a workhorse when it comes to information technology and credit card processing, but its days are numbered. Europe and much of the rest of the world has already adopted EMV cards (sometimes called chip-and-PIN), which rely on microchip technology to do what the stripe does (and far more securely, too.) Additionally, mobile payment options that turn smartphones into wallets are catching on, particularly among the younger generation.

Even the “father” of magnetic stripe credit cards acknowledges that it’s down, but not totally out. “My guess is the stripe will disappear,” says Jerome Svigals, IBM’s project manager who engineered the mag stripe technology. “It’s already disappearing – you don’t see the stripe on mobile phones or smartphones – but you do see the equivalent information content on chips and they emit that into the network. The information structure will be around forever.”

To learn more about magnetic stripe, contact Merchant Express. Merchant Express offers credit card processing and merchant accounts to small and medium-sized businesses.

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People Juggling Credit Card Debts ‘Are In Trouble’

Britons are increasingly looking to borrow money, recently published research shows.

In a study carried out by MoneyExpert, it was revealed that more than three-quarters (78 per cent) of people have at least one credit card. Just over a quarter (28 per cent) of adults have one card, with 24 per cent owning two. Meanwhile, three out of 100 people questioned say they have five cards, with an additional 1.8 million people claiming to have more than this amount. The price comparison website suggested many consumers have a number of credit cards due to running up large debts or attempting to transfer balances across accounts.

Meanwhile, citing the most recent figures from the British Bankers’ Association, MoneyExpert revealed that some 30.4 billion pounds is owed via the form of borrowing.

Furthermore, problems with repaying money owed across a variety of credit cards may extend to difficulties in meeting other borrowing commitments such as loans, overdrafts and store cards. In addition, people may discover that they struggle to make payments on other financial demands, for example utility bills and transport costs.

It was also revealed that 28 per cent of consumers applied for more credit cards over the course of 2007. While the majority of such borrowers were looking to get one more, just over a quarter of these people plan to get two or three borrowing products.

Additionally, the survey indicated that middle-aged people are likely to have the most credit cards. Some seven per cent of Britons in this age group state that they have more than five cards. Meanwhile, seven per cent of Londoners have over five plastic cards. However, among those living in Scotland this proportion falls to one per cent.

Commenting on the figures, Sean Gardner, chief executive of MoneyExpert, said: “The credit crunch hasn’t finished the British love affair with credit cards yet, with millions of us still holding five or more cards. That is entirely healthy if people are swapping debts from one card to another taking advantage of zero per cent deals to ensure that that they pay as little interest as possible. However, there has to be real concern if people are using cards to keep their head above water. Anyone who is trying to juggle five or more credit cards and owes money on all of them is in real trouble.”

He added that as the period when credit was usually easy to come by is “long gone”, consumers should look to be proactive in getting to grips with their debts.

For those looking to get their money management under control, taking out a cheap debt consolidation loan might be advisable. Such a loan could help borrowers to converge a number of financial demands into a single low-cost monthly repayment. This might be of particular help to people struggling with multiple credit card debts.

In research conducted by MoneyExpert earlier this year, it was revealed that 5.9 million Britons changed credit card deals during the second half of last year in an attempt to reduce financial pressures. Some 17 per cent of 25 to 34-year-olds have switched provider so as to get to grips with their spending.

Tom Dawson writes for Essentially Home Loans []. Our visitors can apply online for cheap secured personal loans [] and UK consolidation loans [] at the lowest interest rates.

The World’s Most Exclusive Credit Cards

It possible that you may have seen the articles in the news recently about a high-rolling businessman and his evening excursion in London with friends to an exclusive nightclub. In just a few hours, the businessman and his 15 friends (as well as some happy gatecrashers) guzzled their way through 102 bottles of champagne, 11 bottles of vodka and a Methuselah bottle of champagne (which contains the equivalent of 8 regular-size bottles). You’d probably have had to reach the age of Methuselah to pay the bill: an enormous £105,805. But the Dubai-based businessman didn’t have any troubles paying the bill; out came his American Express Centurion (also known as American Express Black) card, and the bill was paid.

American Express has taken the first and second slots in a ranking of credit card preferences among high-net worth (minimum $5 million) and high-income (at least $200,000 annually) consumers with its American Express Centurion (or Amex Black) and American Express Platinum. There is no doubt that when it comes to exclusive credit cards the American Express Black is one of the most exclusive you can get: membership is by invitation only and there’s an annual fee of $2,500.

These two American Express credit cards are typical of the new credit cards for the elite – expensive card products that offer equally expensive perks, like access to private islands and private jets, to those willing to spend amounts ordinary mortals can only dream about. The American Express Black cardholder should spend a minimum of $250,000 annually to be a member. The American Express Platinum card may come at a lower fee than some other exclusive cards ($450 a year annual fee), but they will look after you with assurances such as their offer to evacuate injured American Express members and their families from wherever vacation location they are to where they can be given quality medical attention.

Credit cards for the mega rich are becoming attractive options and big earners for credit card issuers. They may not make much from finance charges but 4% merchant servicing fees can mean quite a bundle, if the purchase volume is high enough. That businessman’s transaction from his big night out could earn American Express a minimum of $4,000 in merchant processing fees.

Coutts World Mastercard Signia reportedly gives cardholders the opportunity to live like royalty, after all Queen Elizabeth II is a Coutts card holder. The annual fee is $700 but they will kindly waive this if you spend over $100,000 a year on your Coutts credit card. You cannot apply for the Coutts Purple; membership for this is also invitation only.

The market is rich, but there is increasing competition. Smith Barney has its Chairman’s Card ($400 annual membership) also offers special perks, including a facility that will set up your quiet dinner meetings at New York’s most exclusive restaurants (and in Los Angeles). Stratus Rewards Visa is a by-invitation only card that allows you to fly on private jets when you redeem rewards points.

Bank of America recently launched its Accolades card, which uses the American Express network and offers the common (for this elite class of cards) perks like premium tickets to concerts. The Accolades card has a match-your-donation offer (up to $2,500 a year) for its philanthropic cardholders who wish to make charitable contributions. Membership is reserved for those with at least $100,000 of assets in Bank of America’s private banking division.

Why do ultra-rich customers bite? They get the status symbol, but they also get big benefits. They’re in the stratosphere. But those at ground level also have similar opportunities to enjoy big perks for a little exclusivity in their cards. American Express Gold and special Diners Club credit cards also give you the chance to enjoy exclusive privileges when you want some.

Richard Greenwood is founder of Australian finance and credit card comparison website []. Click4Credit reviews a range of credit cards including American Express Credit Cards [].

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Get Foreign Currency From UK ATMs With Your Credit Card

Following a successful six-month trial, ATM organization Link has announced that they are to increase the number of UK ATM’s that dispense foreign currency. As well as giving out UK Sterling, cash points throughout the country will be adapted to allow dollars and euros to be withdrawn by holders of UK debit and credit cards. In the initial trial, travelers were enthusiastic about the ability to withdraw foreign currency without the need to make a special trip to the bank, travel agent or bureau de change. The convenience factor, rather than favorable exchange rates or commission fees seemed to be most important to travelers who took advantage of the trial machines.

Link’s Head of Planning and Development, Graham Mott, believes that the move will be welcomed by many travelers. He said: “The theory at the moment is rather than waiting until they get to the airport to get their foreign currency – as many people do, travelers will withdraw their holiday money at an ATM in the weeks leading up to their break.”

Superstore giant Tesco’s finance arm have been trialling the foreign money dispensing cash points at four locations and are keen to increase that number to 20. Mott believes that upon seeing the success of the current ATMs, airports would be eager to install multi-currency machines in the future, perhaps with even more currencies than pounds, euros and dollars on offer.

However, he may have already been beaten to the punch by Raphaels Bank who has announced that they are to operate ATMs at London airports. Their ATMs are to offer 24-hour access to euros and US dollars without commission fees and at the same exchange rate as the bureau de change, giving travelers the opportunity to avoid the high charges applied to cash withdrawals by debit or credit cards from ATMs abroad. If in any doubt about the charges that will be paid when withdrawing cash abroad, travellers are advised to check with their bank or credit card company before leaving for their holiday.

The option of being able to withdraw foreign currency from UK cash machines gives credit card companies another opportunity to differentiate their products by the way that they charge the withdrawals from ATMs. Aware that many potential customers now compare credit cards based on a number of factors, not just the headline APR, this gives a unique sales opportunity for one enterprising credit card company to set themselves apart from the rest of the market. The size of charges for withdrawing currency with UK credit cards abroad has long been a sticking point with many consumers and it will be interesting to see how the credit card companies treat foreign currency withdrawals in the UK.

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Credit Cards and a Cash-Free Society

It’s probably safe to say that most people have been in that mortifying situation at some point in their lives. A table has been secured, the jackets are off and a round of beverages are on their way – all that’s left to do before settling down is to pay the barperson. However, the bill can’t be paid because that crucial trip to the ATM machine was overlooked in favour of taking a shortcut to the pub.

Luckily, that very embarrassing dash to the bank is becoming a thing of the past given that most places now accept credit or debit cards as payment. Indeed, many people now consciously don’t carry cash at all and rely purely on plastic payment when buying just about anything.

This, perhaps, is a sign that we are moving ever closer towards living in a cashless society. In London, many commuters use pre-paid travel cards such as the Oyster Card to swipe themselves swiftly through the barriers and, with pre-paid credit cards becoming an increasingly popular payment method for many shoppers, some predictions estimate that cash may close to obsolete within five years.

The future of paper and coin payments does look bleak when you consider that plastic is compulsory in many retail circles. Car hire outlets, for example, will only rent cars to drivers who can secure the vehicle with a credit card.

Furthermore, when checking in to a hotel, a credit card will often be requested as a form of security on the room, essentially protecting the hotel against people leaving without paying.

Whilst no payment is actually taken from the card, many guests don’t realise that a portion of the card’s balance is ‘reserved’ by the hotel, which essentially means that the overall balance on the card is reduced until check-out. So if a holidaymaker then decides to go on a shopping spree, or pay for a meal with the card, they can often be left red-faced when the card is rejected.

Nobody likes to go on dish-washing duties when on holiday, which is why many people opt to carry more than one credit card, just to be on the safe side.

However, cards can often be rejected because a person has genuinely spent up to the limit on their credit card. If this is the case, it may be worth considering switching providers and take advantage of 0% interest rates for up to a year, which essentially means a lot of money is saved as the card’s balance is gradually reduced.

For now, cash still has a significant role to play in the retail world. But there can be little doubt that we are moving ever-closer towards living in a cashless society. So we may as well embrace it!

Daniel Collins writes on a number of topics on behalf of a digital marketing agency and a variety of clients. As such, this article is to be considered a professional piece with business interests in mind.

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How Does Automatic Transmission Change Gears

As drivers, we know how the transmission works: we push the clutch in, change the gear and then continue driving normally. Manual transmission also teaches us how to perform clutch control without stalling or rolling on an incline. So how does an automatic car change gears?

There are more parts in this system that makes it a more complicated system. An automatic car has something called a torque converter. For the car to move forward, whether manual or automatic, torque is needed for the initial momentum.

The torque converter is a fluid link where its job is to connect the engine to the transmission and the transmission to the driven wheels (Front Wheel Drive or Rear Wheel Drive).

The engine is connected to the transmission in a bell housing. This is where the torque converter is. The transmission also contains something called planetary gear sets which provide different gear ratios.

The engine’s flex plate is also connected to this torque converter. So the torque converter basically takes the place of a clutch in an automatic car. When the crankshaft rotates it also rotates the converter. This is how the torque converter will disconnect and connect the engine’s power to the load being driven.

The torque converter has main components that make automatic transmission successful. These include:

  • The impeller – connected to the engine which is responsible for driving the turbine using viscous forces on the transmission fluid.
  • The turbine – connected to the transmission input shaft that sends the torque force to the transmission.
  • The stator – which sits between the impeller and the turbine. It lessens churning losses.
    The lock up clutch.

During the compression of the fluid it returns from the turbine that works against the impeller and its rotating movement that also acts on the engine.

The stator redirects the fluid so that the majority of the velocity gets driven towards the impeller which then adds to the torque produced by the motor. It can only rotate in one direction if the impeller and turbine are moving at the same speed. Stators do not apply torque when on a highway, only when coming to a stop or accelerating.

A planetary gear set consists of a sun gear and planet gears which rotate around the central sun gear, like our solar system. A planet carrier gear connects the planet gears with a ring gear that meshes them. The planetary gear set prevents certain components from moving when using clutches and brakes. This alters the input and the output of the system that changes the overall gear ratio.

Depending on which component is fixed it will determine the final gear ratio. If a ring gear is stationery or fixed, the ratio will be shorter than if the sun gear is fixed or stationery.

Brakes Noises Solutions

There will come a time whilst you are driving that you will have problems with your brakes. You might not notice it immediately but once you start to hear the noises, know that there is something wrong.

First thing’s first. Slowly pull over to the side of the road as soon as you start to hear these noises. Make sure that you keep a good distance from the road in case you have a flat tyre instead and need to change it.

These are the different noises your brakes make that you should be fully aware of:

Grinding – grinding is usually the sound of two metal pieces rubbing together. So know that this means that you have a severely damaged brake pad. Without a brake pad, there is nothing that is stopping you safely. It is recommended that you do not continue to drive as it could prevent you from stopping at a traffic light.

Knocking from the rear – this constant annoying sound you hear when applying brakes indicates that there is a problem with the rear drums. There could be a possibility that the brake or rear drum has been resurfaced which is causing that knocking sound. Fixing this problem can be done by yourself but it would be wise to get a technician to fix it.

Squeaking – this is a sign that wear has been done to the brakes. If not fixed it could be dangerous to you. The squeaking sound is usually caused by a wear indicator. This lets the driver know that wear is being detected. Make sure that you get the brakes replaced immediately. You can still drive a good distance before being in danger but make sure that they get replaced soon.

If you are aware of the problem whilst you are driving and know that the problem is dangerous to you and other drivers make sure that you switch your hazard lights on and drive slowly and calmly. If your brakes don’t work at all, release the accelerator and slowly move into the side lane. With the car losing momentum you will eventually come to a stop. Engine braking will also assist the car to slow down. Engine braking is achieved by gearing down.

When you are close to coming to a stop, pull up the hand brake slowly so that your wheels don’t lock up thus making you swerve around dangerously.

The Mercedes Tuning – What Are The Reasons To Tune Your Vehicle?

We are very well aware of the shooting fuel prices in the market. Hence, it is crucial to tune your Mercedes, so that it delivers great mpg. There are many reasons of the Mercedes tuning like better acceleration, enhanced torque, great economy, more power, healthier engine etc.

We have seen rapid growth in the technology in the field of automobiles. The super chip tuning technology is developed especially for the premium cars like Mercedes. The tuning is efficient for both the petrol and diesel version of car. It will ensure that your car gives best performance without any hassle.

Importance of tuning

Once the vehicle is tuned, it will reduce the emission and improve the performance by 15%. It is quite obvious that tuning will help your vehicle in multiple ways. However, you must tune the vehicle timely to avoid any inconvenience. The experts recommend visiting to the mechanic once in three months. The professionals will make sure that none of the part needs repairing.

As the fuel prices have increased, so does the dependency on vehicles. It is crucial to keep your car in good shape. If you maintain the car properly, then the car will run efficiently for long years without any hassle. Else, it would require regular repairing that will ultimately lead to lower mpg and reduce the performance.

What to consider while tuning the exhaust system?

The exhaust system of the Mercedes includes a front pipe, exhaust manifold, catalyst converter, silencer, exhaust tip and tail pipe. While tuning the system, muffler is the easiest to deal. The professionals will replace the stock muffler with high performance muffler.

As a result, you will get a free flow exhaust system. You must keep in mind that the inlet and outlet pipe of the muffler is of the same size as front and tail pipe. Check out the diameter of tail and front pipe. They must have same dimensions for better performance. Other terms of the exhaust system is a little complicated to understand. You must have knowledge of the engine’s power band, exhaust back pressure and usable RPM.

If excessive pressure is produced by the system, then it will have a negative impact on the performance of the engine. This will restrict the flow of exhaust gases. As a result, the engine will be inefficient to expel exhaust gases. Ultimately, it would lead to much reduced engine power.

Dos and the don’ts

Make sure that you never attach pea-shooter instead of the exhaust system to the engine. You must also not install a 10 inch wastewater pipe. In case the exhaust pipe is big enough, then it will lead to much reduced flow velocity of the gases. You have to keep in mind to get the exhaust back pressure perfect.

While tuning the exhaust system, the professionals aim to increase the power of the engine by the right exhaust tuning.