Learning Objectives:

  • Identify and explain the features of different types of payment cards.

  • Understand the legal and operational frameworks for card payments.

3.1 Types of Payment Cards

Payment cards are a dominant form of digital payment. The IBS curriculum on digital payments covers “Electronic payment cards: debit, credit, prepaid, and multi-currency” as a core topic . Key types include:

  • Credit Cards: Allow cardholders to borrow funds up to a credit limit to make purchases, with repayment terms and interest charges.

  • Debit Cards: Draw funds directly from the cardholder’s bank account.

  • Prepaid Cards: Loaded with funds in advance, limiting spending to the available balance.

  • Multi-Currency Cards: Allow cardholders to hold and transact in multiple currencies, often with lower foreign exchange fees.

3.2 Card Payment Processing

The University of Melbourne course examines the “legal framework” for payment cards, including credit cards, debit cards, stored-value cards, and e-money . Key aspects of card payment processing include:

  • Authorization: The process of verifying that the cardholder has sufficient funds or credit and that the transaction is legitimate.

  • Clearing: The transmission and reconciliation of payment instructions between the acquirer and the issuer.

  • Settlement: The actual transfer of funds between the acquirer and the issuer.

3.3 Card Payment Security

The IBS curriculum covers “Key standards in the digital payments industry: ISO20022, EMV Co, PCI-DSS” . Key security standards include:

  • EMV (Europay, Mastercard, Visa): A global standard for chip-based card payments that enhances security compared to magnetic stripe cards.

  • PCI-DSS (Payment Card Industry Data Security Standard): A set of security standards for organizations that handle cardholder data.

  • Tokenization: Replacing sensitive card data with a unique token that cannot be used outside a specific transaction context.

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