What's Visa Card?

Prior to 1958 there were no universal credit cards. Each merchant made their own credit-granting decisions and issued their own charge cards. Actually, it was rare that a card was even issued in the early days. Other than oil companies, most merchants kept paper files that listed your balance and your credit limit.

All of that changed in 1958 when Bank of America revolutionized the consumer credit industry by issuing their blue, white, and gold BankAmericard. Bank Of America literally mailed credit cards off to millions of consumers, no application required. The idea took off and today, BankAmericard (now called VISA) holders number in the millions and VISA cards are issued by over 13000 banks around the world.

How VISA Cards Work

Every VISA card is embossed with a unique set of numbers that separate that card from every other VISA card in circulation. The numbers are not random. Here's how they work:

Digit number one is not significant.

Digits two through six identify the bank that issued the VISA card.

Digits seven through twelve or fifteen, depending upon the issuer, represents the account number.

The remaining digits are called "check digits". These check digits are automatically calculated by a mathematical formula that uses all of the other card's numbers as a key. The check digit is a security device that helps to ensure that the card is not counterfeit with a fictitious number.

The VISA Card "Mag Stripe"

The black strip on the back of the VISA card is a specially-encoded magnetic tape that can be read by the card readers at the checkout stand.

All mag stripes contain the account number as a minimum. Different VISA card issuers add their own additional information to the stripe. This may include your full name, ATM "Fast Cash" preferences and more.

How The Merchant Gets Paid

When you use your VISA card to make a purchase, the merchant's computer payment system contacts the VISA network and transmits the information that's encoded on your card's mag stripe along with the amount of your purchase.

The VISA network contacts the computer operated by the card issuer to check your available balance (called your "open to buy"). If you have enough open to buy to cover the purchase, your balance is adjusted to reflect the purchase and the merchant's bank account is credited with the amount you spent less a service charge.

All of this happens in just seconds and you can tuck your VISA card back into your wallet and keep on shopping!