In the payments industry, a bank card refers to a plastic card issued by a financial institution, such as a bank or credit union, to its customers. Bank cards are used by cardholders to make electronic payments for goods and services, withdraw cash from ATMs, and perform other financial transactions.

Here’s how a bank card typically works in the payments industry:

  1. Card issuance: The financial institution issues a bank card to its customers upon opening a bank account or applying for a specific type of card, such as a debit card or credit card. The card is personalized with the cardholder’s name, card number, and expiration date.
  2. Magnetic stripe or chip: Bank cards have either a magnetic stripe or an embedded chip, which contains encrypted data about the cardholder and the associated account. This data is used for transaction authorization and verification.
  3. Card networks: Bank cards are usually affiliated with payment networks such as Visa, Mastercard, American Express, or Discover. These networks establish the infrastructure and protocols that enable the card to be accepted by merchants globally.
  4. Point of sale transactions: When making a purchase at a merchant, the cardholder presents the bank card to the merchant’s payment terminal. The card is swiped, inserted into a chip reader, or tapped against a contactless-enabled terminal, depending on the card’s capabilities and the merchant’s acceptance methods.
  5. Authorization request: The payment terminal sends an authorization request to the cardholder’s issuing bank or financial institution via the card network. The request includes transaction details such as the merchant information, transaction amount, and cardholder verification data (such as a PIN or signature, depending on the card type).
  6. Authorization response: The card issuer or bank receives the authorization request and performs various checks to validate the transaction. This includes verifying the cardholder’s account status, available funds (for debit cards), or credit limit (for credit cards). Based on these checks, the issuer sends an authorization response back to the merchant, indicating whether the transaction is approved or declined.
  7. Transaction settlement: Once the authorization is obtained, the merchant completes the transaction, and the cardholder’s account is debited (for debit cards) or a credit is applied (for credit cards). The settlement process involves the transfer of funds from the cardholder’s account to the merchant’s account through the card network and the respective financial institutions.
  8. Additional features: Bank cards may offer additional features such as rewards programs, cashback benefits, fraud protection measures, and the ability to link to mobile payment services like Apple Pay or Google Pay.

It’s important for cardholders to protect their bank cards and keep them secure. This includes safeguarding the card, not sharing PINs or card details with others, regularly monitoring account activity, and promptly reporting any lost or stolen cards to the issuing bank.

Bank cards have revolutionized the way payments are made, providing convenience, security, and widespread acceptance across various merchants worldwide.

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