In the era of digital payments, payment cards remain an indispensable tool for financial transactions. But how are they created? Let’s dive into the fascinating world of payment card production and meet those behind their creation.
Payment cards, despite the emergence of newer digital payment methods, remain one of the most widely used financial tools of our time. While many are familiar with how transactions flow from customers to merchants and through the financial system, fewer understand the intricate process of how a payment card comes into existence.
Let’s delve into the world behind the scenes, exploring the entities involved in crafting a payment card, their roles, and the systems they employ.
A Brief Look Back
The concept of payment cards has roots tracing back to the late 1920s. One early predecessor was the charga-plate, a device manufactured by Farrington Manufacturing Co. Merchants provided these to regular customers, allowing them to access store credit. This system laid the groundwork for many aspects of modern payment card operations.
The Card Manufacturers
At the start of a payment card’s life cycle are the card manufacturers. These companies have evolved significantly since the days of Farrington Manufacturing Co., leveraging advanced technology and materials science to create cards capable of storing data, performing complex calculations, and meeting environmental standards.
The physical creation of a card involves several processes, including compounding, molding, lamination, printing, and embossing. Security features like holograms are incorporated to prevent counterfeiting. Notable players in this field include Idemia, Gemalto, Kona, and Oberthur Technologies.
Financial Institutions and Processors
Card manufacturers produce cards based on orders from licensed financial institutions such as banks or fintech companies. These institutions, or sometimes their representatives like processors or personalization companies, place orders specifying the desired features, such as whether they want smart cards or magnetic stripe cards.
Upon receiving the manufactured cards, the financial institution handles tasks like branding and stock registration. Then comes the crucial step of card production, which involves inputting operational data and customizing the card for specific customers.
This production process typically involves three key platforms:
- Customer Relationship Module (CRM): Prepares customer-specific information.
- Card Management System (CMS): Handles card-specific details like the card scheme (Visa, Mastercard, etc.), application identifier (AID), limits, and currency.
- Data Prep Module: Specifically for chip cards, this module securely prepares special data for the card’s chip.
Personalization Companies
The output from the production process is an encrypted file containing sensitive data. This file is securely transferred to personalization companies, often referred to as “perso companies.” These entities are responsible for inputting the data onto the card’s magnetic stripe and/or chip.
For virtual card products, this step can be bypassed.
However, for physical cards, it’s crucial. Perso companies must be certified by card schemes due to the delicate and security-critical nature of their work.
System Providers and Enablers The final stages of creating a functional payment card involve several additional stakeholders:
- Card Delivery Services: Ensure the secure transport of cards, often using tamper-proof packaging and reliable logistics.
- Card Activation Systems: Determine how and when a card becomes active, a process specified during the card production phase.
- PIN Management: Handles the secure creation and distribution of PINs, either through envelope delivery or customer selection methods.
- Transaction Security Systems: Implement additional security measures such as two-factor authentication (2FA), 3D-secure protocols, and card management software allowing users to control their cards remotely.
These final steps, often bundled as “Card Fulfillment” services, ensure that the card not only reaches the right hands but is also fully functional and secure upon arrival.
In conclusion, the creation of a payment card is a complex process involving multiple stakeholders, each playing a crucial role in bringing this essential financial tool from concept to reality. Understanding this process provides valuable insights into the intricacies of the payment card industry and the measures taken to ensure security and functionality.
