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How does your credit cards work?

Updated on October 30, 2012

The numbers on our credit cards may look like a random bunch of numbers, but in fact they are not. Each number has a purpose, and understanding the purpose of each of the numbers could actually help protect you and your business from fraud. “I run my cards through a card reader you may say”, well if you are business that doesn't process your Credit Cards straight away, then you may find this article invaluable in making sure the card details you are taking are is in fact a valid Credit Card. Or maybe you just wish to have an interesting story to tell at your next dinner party, whatever your reason this is the information you want to know.

The first digit of the card tells you which system it is, the following companies use:

• 1 and 2 are used by airlines

• 3 are used by travel and entertainment cards such as American Express and Dinners Club

• 4 is Visa

• 5 is MasterCard

• 6 is Discover Card

• 7 is petroleum companies

• 8 is telecommunication companies

• 9 is national assignment

The structure of the Credit Card number itself will vary depending on the system being used. For example the first two numbers for America Express will be 37 but Dinners Club and Carte Blanche will begin with the numbers 38.

For the American Express system, the numbers represent as follows:

The digits number three and four signify what type of currency is being used, the digits five through to eleven are the persons account number, the digits twelve through to fourteen are the card number issued within the account and finally the digit fifteen is a check digit.

For the Visa system the numbers represent as follows:

The digits two through to digit six are the bank number, digits seven through to twelve or in some cases seven through to digit fifteen represent the bank account number and finally digit thirteen or sixteen is the check digit.

For the MasterCard system the numbers represent as follows:

The digits two and three, two through to digit five or the digits two through to digit six are the bank number. This all depends on what number digit two is, whether it is a one, two or three. The digits after the banks number will be the person’s bank account number and finally digit number sixteen is the check number. The INN, Issuer Identification Number The first six digits on any Credit Card are the Issuer Identification Number. T

hese are used to look up where the card originated from; a list of Card Numbers (INN) can be viewed on Wikipedia at the following address:

The customer account numbers most card companies use nine digits for customer account numbers, but with that said it is all possible to have an account number up to twelve digits in length. So with this in mind, the current algorithm for Credit Cards; means that around about a trillion cards can be issued before they need to change the card system.

Although today most cards that are issued are sixteen digits in length, it is actually to issue cards that are up to nineteen digits in length with the current system that is in place. And there is a chance that in the future we may see longer numbers becoming a common place. The Check Digit The check digit is used to validate a person’s credit card number using the Luhn Algorithm, also known as Luhn Formula or Modulus 10. It is a simple check-sum formula and it’s used to validate a wide variety of identification numbers, especially Credit Cards, IMEI numbers and Social Insurance Numbers.

It was created by the IBM scientist Hans Peter Luhn and the patent was filed back in 1954, but wasn't granted until almost six years later in 1960. As the algorithm is now in the public domain it has been made wide use of. Although it wasn't created to be a cryptographically secure hash, it was actually design to ensure against errors created accidentally. Though it is now used as a simple way to validate numbers.

Understanding How The Luhn Algorithm Validation Check Works.

The Algorithm works by using the check digit to verify against its intended number, this is done like this. Counting from right to the left and you are doubling every second digit.

So for example if the Credit Card Number was: 4634 8932 1298 2767

Line One - I’m going to break this down now line by line to explain what is happening. On the first line we have the Credit card number.

Line Two - So starting from the check digit which is seven, we next double the six and it gives us twelve, the next digit the 7 remains the same, the two would be double the eight remains the same. Continue until you get to the last number on the left, in this case the four, which is doubled.

This now gives us the numbers we have on line two,

Line Three - Now for every occurrence of a double number, we now need to take the first digit of that double number and add it to the second. So on line two we have three sets of double numbers, we have 16, 18 and 12. So to find the sum of the digits for sixteen we would add the one and the six together which will give us our number seven.

For the eighteen we add the one and the eight which gives us nine and for our final double digit of twelve we add the one and the two which gives us three. And now to get our final sum of numbers we will add the final numbers, our sum adds up to ninety.

For a credit card to be a valid credit card the final number must be one that can be divided by ten.

Line One 4 6 3 4 8 9 3 2 1 2 9 8 2 7 6 7

Line Two 8 6 6 4 16 9 6 2 2 2 18 8 4 7 12 7

Line Three 8 6 6 4 7 9 6 2 2 2 9 8 4 7 6 7 = 90

Well there you go, try it for yourself, you never know when it could save you some costly mistake, or maybe you would just like to impress your friends over dinner. Whatever you do with the knowledge you've now gain, enjoy.


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    • Alison Dittmar profile image

      Alison Dittmar 

      6 years ago from PA

      Am bookmarking to read/learn later!

    • profile image

      alison dittmar 

      6 years ago

      Interesting. Glad to see you are sticking with Hub writing. :)

    • CWanamaker profile image


      6 years ago from Arizona

      This is pretty cool. I have always wonder about this. Now I know that there is a pattern and significance to the digits in a credit card number.

    • pinkhawk profile image


      6 years ago from Pearl of the Orient

      This is interesting... ^_^! Now my curiosity tickles me.. thanks!


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