Apply credit card free online
No one would disagree with the fact that credit card market has been thriving in the past three decades. It has become the most popular means of electronic payment or a plastic payment system, a system where a small plastic card is issued to the user for making any purchases on credit.No doubt that it provides the holder with multifarious benefits. It is not only a secure way of carrying monetary value within or abroad but it also provides you with the benefits of obtaining credit or making payment in installments.
How the credit card system works
While making any purchases, credit card holder shows card to vendor. Vendor gets approval from the credit card company by swapping that card in an automated credit card swipe machine. That machine generates a slip and the bill is considered paid by credit. A copy of that sales slip after having signed by the customer remains with the vendor, which is sold to an acquiring bank a bank that agrees to perform credit-card transaction for a business. The bank then requests the credit card company to reimburse the debt. The credit card company pays the bank and bills the same amount to the cardholder offering interest free credit for a month. If cardholder is unable to pay on the due date, the credit limit is extended with the rate of interest.
Difference between credit card, debit card, and charge card
Though all these cards are of the same shape and size as specified by the ISO 7810 standard, a credit card is used to lend the money to the user for a period of time whereas in a debit card system, the money is removed from the users account. Charge cards, as compared to credit cards are limited to a months credit and do not extend the user credit. The payment in a charge card system must be made each month in full.
Credit card system - online
Businesses that have a large number of transactions can arrange with the acquiring bank to have direct access to its server after gaining merchant-status with the bank. The bank may not give merchant-status for various reasons like security, issues pertaining to the reputation of the bank and so on.
Steps for an online credit-card transaction
1. Consumer clicks on the buy button on a merchants website.
2. An Internet Payment Service e.g. Cybercash (a software that must be installed both by the consumer and the merchant for processing credit-card transaction) connects to the merchants acquiring bank to process the transaction using the following steps:
a. Cybercash sends a request to the merchant with an online invoice, giving the amount of the merchandise.
b. After the consumer attaches his credit-card details with this invoice and sends it back, Cybercash software on the consumer*s machine encrypts credit-card details and forwards it to the CyberCash Website.
c. Cybercash then decrypts this information, takes out the credit card information, the merchants name, item of sale and amount and forwards it to the merchants acquiring bank.
d. The acquiring bank immediately routes the information to the card-issuing bank, requesting for an authorization.
e. The issuing bank checks the credit card holders account, verifies the credit limit, and generates an authorization code, which is sent to the acquiring bank.
f. The acquiring bank sends an approval or denial code to the Internet Payment Service provider. This approval or denial is then forwarded to merchant and finally to the consumer.
3. After approving an authorization, the issuing bank puts a hold on the card holders account. It doesnt debit the amount yet.
4. The merchant later reviews all sales drafts and sends the codes on them to the acquiring bank through the Internet Payment Service provider.
5. The acquiring bank sends a request to the issuing banks, which deduct an interchange fee from the acquiring bank, and pass on the payment.
6. The acquiring bank then deposits the amount to the merchants account (through Internet Payment Service provider) after deducting a transaction fee.
Basic threat and security of online credit card transaction
The most important aspect of online transaction is confidentiality of the information that is stored, processed or transmitted electronically. Internet being a medium where security and privacy seems to be fictional, has given a sense of reluctance to customers to enter into online transactions. But there are number of systems that are used for security measures. The simplest being eradicating the payment process from the Internet i.e., personally delivering the credit card number through phone.
To ensure the privacy of data involved in the transaction to re-assure the buyer can be achieved by hosting the site on a secure server that uses encryption protocol like, SSL (Secure Socket Layer), SET (Secure Electronic Transaction), Secure-HTTP. These protocols encrypt the data being transmitted.
Comparing encryption protocols
SSL provides secure connection through internet to merchant server. S-HTTP applies SSL used for HTTP Communication. SSL requires all communication is encrypted by RSA/DES, and integrity is confirmed. S-HTTP is widely used for e-commerce websites (e.g. for orders, credit card information etc.). S-HTTP requires an SSL compliant browser and server.
SET is developed jointly by Visa, Mastercard and American Express to become the dominant system of paying by credit card over the net. It is built on top of SSL, and is much more secure. Customer downloads and installs a digital wallet. The digital wallet contains the customer certificate. SET is slower than S-HTTP and is far more complex for the user. The greatest plus point that the SET system has is its backing
Another important aspect of online transaction is the integrity and authenticity of information/data ensuring that the buyer is engaged in a valid transaction - for the benefit of the seller. This is achieved using a TTP (trusted third party). The TTP is a public company, which provides a vendor with a digital certificate. This confirms to the customer that the company they think they're dealing with is who it claims to be. Digital certificates can be bought from many companies including Verisign and Thawte. They require a fair amount of company documentation.
Both SSL and the digital certificates require encryption. This is provided using asymmetrical - aka public key - encryption. This requires two keys: public and private. The public key is published and can be used by anyone to encrypt anything but only the private key can decrypt it. An SSL exchange is carried out using a public key given to your browser by the server. The digital certificate provider confirms that the key belongs to a valid certificate used by the company at the domain where the transaction is taking place. In effect, it's a three way transaction, but each party can only access the information it needs to do its job.
Anti-Fraud Guidelines for online vendors
* Make fields like mailing address, pin number, phone number, etc. mandatory.
* Verify the details using Address Verification Services.
* Dont process orders on postal box numbers. Insist on physical address.
Anti-Fraud Guidlines for credit card holders
* Don't give out your credit card number(s) online unless the site is a secure and reputable site.
* Make sure the transaction is secure before you input your credit card number. Check out the security/encryption software it uses.
* Dont trust a site because it claims to be secure.
Other Articles
