Classification of modern plastic cards

Classification of modern cards (or introduction to terminology)

Cards can be classified in different ways. Each of the classification systems will be coherent and logical in its own way. It all depends on what principle it is based on.
For example, cards can be divided by the organizations that issue them (issuers) and, accordingly, by the scope of application. For example, Bank cards are issued by banks, shopping cards are issued by stores, gas station chains issue fuel cards, and transport organizations (metro, railway) issue transport cards. The list goes on.
This is the most obvious classification, although modern technology makes it very confusing. How, for example, can I classify a social card that allows me to pay for a purchase in a store (Bank card), get medical care (mandatory health insurance card), ride the metro or railway (transport card), or get a discount in a store (discount card)? A special term has been introduced for such cards – multiapplication card. In other words, it is a card with many applications. Therefore, they prefer to talk about the apps that are available on the card rather than about a specific type of card. For example, a card with discount and insurance applications. A separate section of the article is dedicated to multiapplication cards.
Cards can be divided into payment and non-payment cards based on their ability to pay. Payment cards can operate under different payment schemes: credit cards are used for obtaining consumer credit, debit cards can be used for settlements with trade and service organizations and for receiving cash from banks only within the balance on the Bank account. Non-payment cards provide card functions that are not related to payments, such as access to services or discounting when paying for goods or services.
Finally, there is a technical classification of plastic cards related to the methods of recording and processing data on the card. This is a purely informational component – how exactly we will process the data stored on this small piece of plastic. According to this classification, cards are divided into embossed or printed (applying information about a particular card by stamping or thermal printing), cards with a magnetic stripe or bar code (either a magnetic stripe or a bar code is encoded), and cards with an integrated chip (contact and contactless chip cards).

Let’s start with issuers. As already mentioned, this is the most obvious classification when it comes to just one use of the card. If there are two issuers, they usually talk about joint (co-branding) cards. In many cases, joint cards are perceived as a way to promote trademarks owned by each of the issuers. This is one side of the issue, the other is the combination of different technologies available to the cardholder on one material object. For example, a card can be used for both payments and discounts at the same time. It is clear that this only increases the card’s consumer value. It is no coincidence that we have recently seen an almost extensive growth in joint projects. As for multiapplication cards, a separate section of the article is devoted to this issue.
The classification of cards “in relation to money” divides all cards into two groups.
The first is cards issued by credit and financial institutions and similar organizations. These are the usual payment cards. They can be used to pay for goods and services in trade and service organizations, or to receive cash at banks or ATMs.
The name “payment” is purely conditional – in essence, when receiving the same goods and services, a specific payment (as the fulfillment of monetary obligations between the seller and the buyer) does not occur. There is a so – called authorization – confirmation of the transaction between the buyer and the seller by the Issuer-the Bank or other organization that issued the card. For example, such an organization may be a non – Bank structure-American Express or Dinners Club. These cards are called T&E cards-travel and entertainment cards, but according to the technology of their use, they are perceived as ordinary payment cards.

In any case, after authorization, a “borrower-lender” relationship is established between the seller, buyer and card Issuer, which is then resolved through financial institutions (banks) by cashless payment. In the end, money is transferred from the cardholder’s account to the merchant and service organization, and other organizations involved in the complex process for this operation in a broad sense, they receive their own Commission.

The term “payment cards” implies that the card is used for making payments between the seller and the buyer, and the range of goods and services is not clearly defined. In the end, the seller pays for the opportunity to make non-cash payments and thus increase their revenue.

However, payment cards can also be used to receive cash. Here authorization also performs the function of confirming the cardholder’s solvency (if the card is a credit card, then the credit institution). A Bank that issues cash via an ATM or cash register makes sure that
creditworthiness (authorization) and issues money as a cash advance. Cash payments, as is customary for payment cards, are made later. In the end, through a number of financial organizations, money is debited from the cardholder’s account in favor of the organization that issued the money, and the cardholder pays commissions from their funds, which are then distributed among the other participants in the transaction.

Further division of payment cards into credit and debit cards. Actually, this division does not apply to cards. The only difference is in the calculation methods between the card Issuer and its holder. In the first case, the holder uses the Issuer’s funds, and then repays the debt. In the second case, payments are made from the cardholder’s own funds within the Bank account balance. Bankers usually allocate more cards with an overdraft. These are cards that allow you to overspend funds from your debit card account when there is no money to pay for goods or services. From a consumer point of view, an overdraft card is a credit card option, since borrowed funds are used to secure payments.
It happens that a so-called e-wallet is added to credit and debit cards as a separate object of classification. The issue of an electronic wallet for payment cards is exclusively technological. An e-wallet is usually understood as a chip card that works offline when it is debited without registering the transaction by the Issuer at the time of the transaction using the card. And only as long as the balance of the electronic purse will not be zero. Although overdraft is also possible here – by declaring the maximum negative balance of the e-wallet. You can also use auto-credit mode , when the balance of your e-wallet is automatically increased by a certain date, such as the date of payment of wages. So, the e-wallet is included in the classification of cards as a separate product that operates primarily on the debit principle, but allows in some cases overdraft or automatic replenishment of its balance.

Issuing payment cards is mainly the prerogative of banks. It is no coincidence that payment cards and Bank cards are almost the same. The main part of the article is devoted to these cards.

The second group – non-payment cards-assumes that payments have already occurred or they are not directly related to the card, and the cards are used only as a accounting tool. Calculations here are not the fulfillment of monetary obligations between the parties to the transaction, but only a settlement mechanism related to accounting for the provided goods or services in monetary or physical terms (which is more similar to calculations in accounting). These cards are divided into two subgroups: settlement and discount cards.
So, the payment card, despite its name, has only an accounting function. For example, a transport card was purchased, i.e. the fare paid in advance to the transport operator. Then, when passing through the turnstile or registering the fact of travel in any other way, the transport card holder does not pay money – the operator has already received it and only technically takes into account the service provided. This scheme does not differ from the calculations on a card with an erasable stripe (scratch card) for mobile communication or Internet use. Payment for the information resource occurred when purchasing such a card, but the card itself only identifies its owner in the service delivery system.

The payment card does not have to be prepaid. First of all, this applies to the purchase of goods. You can imagine a loan scheme, when the card Issuer (usually a trade organization) attracts money from the population (interest-free loan from customers), and then returns it with their goods, using the card to account for such operations. This scheme is used when the range of products is unknown in advance, but their seller is accurately determined.

A discount card, as its name implies, provides its holder with discounts or other benefits from the card Issuer or from an organization that has signed a corresponding agreement with the discount card Issuer (a common example is discount systems like Countdown). For more sophisticated discount schemes, in which the level of discount depends on the history of card use, a special term was coined – loyalty programs. Accordingly, the cards are so called-customer loyalty cards. Discount cards (or loyalty cards) are usually merchant cards, although discount technologies are used not only in trade, and the cards themselves are not necessarily issued by merchant or service organizations. A separate section of the article is dedicated to trading cards.

identification cards are allocated as a separate class. They are understood as cards that serve to identify their holders. We emphasize that any plastic card has an identification function. According to the international standard ISO / IEC 7812, other than identification cards do not exist. There is a subset of cards intended for financial transactions (ISO/IEC 7813), but they are also defined as identification cards, but have special properties. It is safe to say that any plastic card is an identification card. This is its main function. All the others are additional, application-oriented cards that define the card application at the same time. Here is an example: a transport card holder using a metro card passes through the turnstile to the station. The turnstile does not identify him as a specific citizen (with a first name, last name, etc.), but identifies him as a person who has the right to pass. The identification function is available, and the card type is a transport card.

However, an identification card has the right to exist as a separate type of plastic card if its functions end with the identification of the holder. A typical example is an access control card for both physical access (for example, to enter a room) and informational access (for example, to use a computer). Purely identification cards are widely distributed. Now more and more common are cards that have in addition to the identification function and authentication of the holder. These cards allow you to determine not only who the cardholder is, but also that “he” is really “he”. The simplest example of authentication information is a signature sample or a photo of its holder on the card. More complex is fingerprint data stored in the chip card’s memory. The future of ID cards is cards biometric information that uniquely identifies the cardholder, electronic passports, and other identification documents.
So, we see that the problem of card classification lies in technology. As a piece of plastic, the card is suitable only as a bookmark for article or as an object that allows you to clean snow from the windshield of a car. In fact, all the material in our encyclopedia is devoted to card technologies, business aspects of working with cards, and many other issues that are directly related to plastic cards, but not to cards as such.

The technical classification of cards divides them according to the method of storing information and the possibilities of information exchange with other elements of the card system.

Since any plastic card is an identification card, it must have a unique number (for obvious reasons, we do not consider cards that are purely image-oriented, such as advertising calendars). In addition, the card can also carry other identification information – the name of its holder, expiration date, etc., as well as data for visual authentication of the holder – a photo, a signature sample. All other information stored by the card depends on the system that uses the card.
If the system does not provide automated information processing, the necessary data is stored directly on the card. Data is printed either on the plastic surface of the ready-made card by special printers, or on one of the plastic layers before the card is laminated (in this case, the data is protected from forgery by a transparent layer of laminate), or it is squeezed out in the plastic of the blank card.

The last operation is called embossing, and the cards themselves are embossed. Embossed cards involve some automated processing of information – from the card, you can make an imprint of the embossed data on a special paper (slip) using the simplest mechanical machines (imprinters), which are essentially a manual press. Then you can collect the slips and enter the information printed on them manually into your computer. We should immediately mention that this technology is quite old. It appeared at the beginning of the last century, when the cards were metal and the number was pressed on their surface. But it is still used where the speed of information processing is not too critical for the client, and the number of cards accepted by this organization is not too large.
Such cards do not have a special name, because other technical types of cards, despite other media, usually have printed or embossed data for visual reading by a person.
Then the cards are divided into two large groups: cards with a chip (chip) and all the others (non-chip). The differences between them are as follows. Non-chip cards have a passive data carrier – a magnetic stripe, a barcode, Fact, this data carrier is no different from a piece of paper with text written on it, which can be read and used in some way. You can erase it and write a new one, but you can only read it later.
When we talk about a chip card, we mean that such a card not only stores and changes data, but can actively communicate with the receiver of information. In fact, we are talking about the interaction of two devices, one of which is a smart card. It is an active storage of information. That is why chip cards are fundamentally different from all other cards: with a magnetic stripe, with a bar code, and optical.

The most traditional of the “passive” cards is a card with a magnetic stripe (colloquially “magnetic card”). Usually, the magnetic stripe is encoded when the card is issued, although there are devices for rewriting it. For example, in the Moscow metro, a magnetic ticket (although not a plastic card with a magnetic stripe, but its closest paper counterpart) is rewritten by the corresponding device when passing through the turnstile. This is possible because the device is motorized, the ticket passes through it at a constant speed, and the correct recording is guaranteed. In a Bank terminal or similar devices, on the contrary, the magnetic card is never rewritten. Reading the magnetic stripe occurs when the card is passed through the terminal manually, which does not guarantee a constant and precisely set speed. Bank employees take this as a given, realizing that the magnetic card is a passive element of card technology. Retail employees (perhaps due to less technical knowledge) try to use a magnetic card as a rewritable one, for example, in customer loyalty programs, when it is necessary to change the number of bonus points or the discount level on the card. At the same time, they wonder why rewriting devices are significantly more expensive than magnetic stripe readers (in fact, it is cheaper to use a chip card for this purpose).

The second type of widely used “passive” cards is a bar code card. It is incorrect to assume that they are used only by retail, although such cards, due to the fact that the retail industry already has equipment for reading bar codes, take up a significant share of discount cards. Bar code cards are more reliable than magnetic stripe cards. The latter can be demagnetized and serve for a short time (usually no more than two or three years). Bar code is widely used for personalization of chip cards, allowing you to automate the entry of the card number, expressed in the bar code, into the card memory.

The third type of “passive” card is a card with optical memory. These cards have a very large amount of memory, and the technology for writing and reading information is similar to the one used CD. These cards have a fairly narrow application-storing large amounts of data, since there are already developed non-card technologies for such purposes.

“Active” chip (or smart “smart”) cards are also divided into classes. First-by the method of “communicating” with the reader / writer. These are contact cards (for example, payphone or SIM cards), contactless cards (for example, a travel document of the Moscow or St. Petersburg metro, commuter services of Russian Railways), and smart cards with a dual interface (contact – contactless). The first class also has its own division: memory cards and microprocessor cards. For more information about contactless smart cards and cards with a dual interface, see the section on multiapplication cards.
In conclusion, we will touch on another common scheme of classification of cards – by material (paper, metal, plastic, etc.). The title of the article is “Plastic cards”, so we will focus our story on them. The most common material from which cards are made is PVC (chloride), or PVC. The material is almost eternal, having excellent mechanical properties. The vast majority of cards in the world are made from it. Therefore, the rest of the article will be devoted to information technologies using plastic cards, economic and legal aspects of the card business, security issues and many others, and not just a small piece of plastic that is stored in our citizens ‘ wallets and, we hope, facilitates their difficult life in this world.