The Curiosity Hub

By Zaheer Shaikh

 

The Power of a 3.37x2.13-Inch Plastic Card

Do you know the power of a 3.37x2.13-inch plastic card? This tiny piece of plastic can connect you to millions of merchants worldwide, transfer money across continents in seconds, and open doors to exclusive privileges. But how does it work? What magic happens behind the scenes of this little square of convenience? Just ask yourself, and don't worry if you don’t know. We will cover all the details in upcoming posts.

Till now, we've just skimmed the surface of what we see when using payment cards. Now it's time to dive deeper into the payment domain and understand how it all works under the hood.

Sometimes, it may feel like certain concepts are repeated, but they are necessary to build a deeper understanding and to answer some of the bigger questions that follow.


  1. When we make a payment, what happens? How is money transferred from one bank account to another?
  2. We say that a payment scheme facilitates this. Does the money go to the payment scheme? How does the payment scheme know where to transfer the money?
  3. How does the issuer or acquirer know that the transaction is completed?
  4. What is the difference between a Single Message System (SMS) and a Dual Message System (DMS) in payment processing?
  5. Why are Single Message Systems commonly used for ATM transactions, while Dual Message Systems are typically used for POS transactions?
  6. Can a payment system switch between SMS and DMS depending on the transaction type? If yes, how is this managed? If not, why?
  7. If a transaction is initiated at a Point of Sale (POS) terminal, but there is a network failure before completion, how does the system handle the rollback or reauthorization?
  8. With so many banks and payment gateways involved, how do they communicate and ensure that payment transactions are processed accurately and efficiently?
  9. What happens if the transaction fails?
  10. What is payment fraud, and how is it detected or handled?
  11. What if the customer disputes a transaction or cancels it? How does the refund process work?
  12. When Customer receive a refund but do not return the product, what happens? How does the merchant handle this situation?
  13. A merchant claims they did not receive payment for a successful transaction on a customer’s card. How would you investigate and resolve this issue?
  14. What happens if a customer initiates a chargeback, but the merchant has already shipped the product? How is this situation typically handled?
  15. How does a bank reconcile payments from multiple card networks at the end of the day? What happens if discrepancies are found?
  16. What would you do if a payment system outage occurs during peak transaction hours, such as a major online sale? How can the impact be minimized?
  17. What happens if a credit card is used beyond its limit?
  18. What if a credit card balance is unpaid on time? How are late fees and interest calculated?
  19. What is the billing lifecycle of a credit card?
  20. A customer’s card expires while they are traveling abroad. How can they continue to make transactions until they receive a replacement card?
  21. How is a credit card statement generated? What details are included?
  22. How can a single customer hold multiple cards (debit, credit, prepaid) from the same bank? How are these accounts linked and managed?
  23. If a customer’s card is blocked due to security concerns, can they still access their account through other linked cards?
  24. How does the bank determine credit limits for each card when a customer has multiple credit cards?
  25. How does OTP (One-Time Password) work in validating transactions?
  26. If you cancel an order after the statement is generated, what happens to the payment?
  27. If you withdraw money using a credit card and do not pay on time, how is the interest calculated?
  28. What happens if you lose your card? What processes happen behind the scenes to secure your account?
  29. What is a supplementary card, and how is it different from an add-on card?
  30. If you order a replacement card, will it have the same details as the old card, or will it be different?
  31. How can the same card be used in multiple countries?
  32. What is card-based payment, and how is it different from non-card-based payment?
  33. What is a cross-border payment, and how does it work?
  34. What is SWIFT, and who controls the payment domain?
  35. What happens if a cardholder forgets their PIN during a transaction?
  36. How does contactless payment work, and what are its security measures?
  37. What is tokenization in payments, and how does it secure transactions?
  38. In a real-life scenario, how do tokenization and encryption protect sensitive cardholder data during online transactions?
  39. What are BINs (Bank Identification Numbers), and how do they identify issuing banks?
  40. What is 3D Secure, and how does it enhance transaction security?
  41. How does a payment gateway work during online transactions?
  42. What are the roles of the issuing bank and acquiring bank in the payment process?
  43. What is an interchange fee, and why is it charged in card transactions?
  44. How are payment networks like Visa, Mastercard, and RuPay different?
  45. What is the role of EMV chips in payment security?
  46. How does a virtual card work?
  47. What are chargebacks, and how do they impact merchants?
  48. What is the difference between recurring payments and one-time payments?
  49. How do international sanctions affect cross-border payments?
  50. What are settlement cycles in payments, and how do they work?
  51. How does dynamic currency conversion (DCC) work in cross-border payments?
  52. What is PCI DSS compliance, and why is it important in the payment industry?
  53. What is the difference between a payment processor and a payment gateway?
  54. How do banks ensure compliance with international standards like PCI DSS or ISO 8583 when operating across multiple regions?
  55. What is the difference between QR-code-based payments and card-based payments in terms of security and speed?
  56. How does Buy Now, Pay Later (BNPL) work, and how is it different from traditional credit card transactions?
  57. How are rewards and cashback programs managed across multiple cards for the same customer?
  58. How do exchange rates affect settlement in cross-border payments?

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