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Faster than the speed of swipe, what really happens when you swipe your debit card


Photo Credit /Jessica Mullen

Ever wonder what really goes on when you swipe your card at the terminal at the grocery store? If you're a geek like meet, I'll bet the answer is 'yes'.

Some of you may guess that it goes directly to your financial institution. Well, it does eventually, but the transaction takes a very scenic route.

First stop on the trip is the merchant processor for the store you're at. They receive the transaction and read the first six digits of the card number, also known as the BIN (Bank Identification Number). Then the list of BINs in the system is perused to determine where to send the transaction next. In other words, what network should the transaction be processed through? For example, if your card says "MasterCard" on the front of it and you used it as 'credit' the transaction will be shipped over to MasterCard. Or, if you completed your transaction with your PIN, and your card says "NYCE" on the back of it, off the transaction goes to NYCE.

Once it gets to MasterCard or NYCE, they look at their system lists to find out who the processor is for your institution. EFT Processors come in many shapes and sizes, but company names such as Élan, FirstData, and Fifth Third all come to mind. The EFT processor is going to check the transaction for all the right pieces of data, like your PIN and whether or not the card is a valid one. And, if the card is valid, is it able to perform the type of transaction being requested? After all that happens then the EFT processor sends the card to "the bank". Now "the bank" may be another processor, but that's a whole 'nother story.

When the transaction gets to "the bank" some of those pieces are checked again against the banks records, and then of course your balance is checked to make sure you have enough money in your account to make the purchase.

Then after the transaction has passed all the check points, the transaction is approved and the approval message goes from "the bank" to the EFT processor, to the network, on to the merchant processor and back to the store where you are standing waiting for the approval and the receipt for your purchase.

Whew!! When things are going well and all systems and checkpoints are online, that happens in a matter of seconds. Amazing, huh?

Now, I think we've all been in line at least once when our card has been denied and we can't figure out why when we know there's plenty of money in the account. There are a number of reasons why that might happen. Think about all the check points in the process. If one of them is "offline" and the transaction can't complete its tour of duty, then the transaction might get declined. Another reason for denial might be that you've reached your limit for the day. Most financial institutions put a maximum dollar limit on the amount of transactions you can do per day. Some limit the number of transactions you do per day. This is done to protect both you and the financial institution should your card fall into the wrong hands. You should know what these limits are so you're not caught off guard.

Or maybe you're travelling and your card won't work. The first thing to check is if you are using your card at a terminal that supports the kind of card you have. Said differently, if your card says "VISA" and "Pulse" on the back of it, you can't use it at a terminal that only says "STAR" on it. Try a different terminal that matches your card.

Another possible reason is that your institution may have a block in place for a specific geographic area. Recently, financial institutions in this area were seeing fraud emanating from Southern states so they put blocks in place for transactions coming from that area. Call your institution or check their website before you travel to see if they have any restrictions in place. In some cases, they can lift these for your card before you travel so you're not impacted. And always travel with a second or third form of payment, just in case.

Well, I hope you've enjoyed the journey of a debit card transaction, and will be as amazed as I am the next time you visit the grocery store.



  • Anne 5 years ago

    I work for an EFT network and am compelled to say that this is an excellent and accurate explanation!

  • Stacy Litke 5 years ago

    Thanks Anne!