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FAQs regarding High Risk credit card authentication and security

With the increase in the number of cases of fraud using credit cards, fraudulent usage, identity theft and internet phishing, people get concerned about security while using their credit cards. Fraudulent usage of credit cards is very annoying and it leads to the damage of a trader’s credit. Hence, it is not surprising to see a number of people asking questions about credit card authentication and security. Following are a few frequently asked questions (FAQ) regarding security of credit cards:

-       How do store terminals or ATM know a consumer’s PIN number?

The personal identification number or PIN is most often used to authenticate a consumer’s identity when the ATM or credit card is used. When the PIN number is chosen for the first time by a consumer, it will be “encrypted” – storing in the form of secret codes of symbols and letters – which is stored either in databases of on magnetic stripes behind the credit card.

-       If the PIN number gets stored in databases, does it mean that credit-card employees or banks can access them?

The method of encryption used by credit cards and ATM is known as “one-way encryption”. This simplifies the verification process for a financial institution’s computer to verify the PIN and the one that is given. However, it is next to impossible to extract PIN codes in a text format from encrypted databases.

-       How is the card “read” by the machine?

The stripe behind the ATM card or credit card is known as “magnetic stripe”. This stripe consists of several tine iron-based magnetic particles. A credit card can be written in the same manner in which computer hard drives are written, that is, by the changing charge of magnetic interaction. The stripe is written with a consumer’s identifying data and account number. When the card is swiped, the details are read and sent through a modem to the “acquirer” company – a firm which acquires payment guarantees from credit card companies on the basis of the details stored on the magnetic strip of a credit card.

-       Is it insecure and dangerous to buy online?

The information on the credit card is under less threat while it is being transmitted online when compared to handing a card t a clerk at a store. The real threat to the information on the credit card is not from hackers who hit online traders, or stealing information of credit cards via phone lines or modem. The real threat comes from 2 different directions:

-       Hackers who use back doors in order to get access of bank records, credit card firms and repositories of data.

-       The other danger is from a practice known as “phishing”.

In the case of phishing, the thieves of credit cards trick consumers to enter the credit card information and the consumer’s identification. They usually build web sites which look similar to sites such as American Express and Paypal in order to capture a consumer’s information so their own vested interests.

Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account, high risk ach account or offshore merchant account for a high risk merchant.