Understanding Fintech Card Embossing and Transaction Processing

Note: Details may very country wise and processor wise

Photo by CardMapr.nl on Unsplash

Introduction:

In the world of fintech, card embossing and transaction processing are crucial aspects that enable seamless financial experiences for users. In this blog post, we will dive into the details of how fintech institutions like Paytm, Slice, and Zeta handle these processes and explore the role of APIs and switches in facilitating smooth transactions.

Card Embossing:

Card embossing is the process of creating physical cards with user-specific information. Fintech institutions partners with banks to obtain a range of Bank Identification Numbers (BIN first 6 digit of a card number represents a bank) that are essential for generating unique card numbers. Once the BIN range is allocated, the fintech institution can proceed with card embossing.

The embossing process involves generating an emboss file that contains the necessary information for each card. The emboss file follows a specific format, with each field representing a particular piece of data. Let’s take a closer look at some of the key fields:

• Primary Account Number (PAN/Card Number)
• Sequence Number(represent how many bank accounts are associated with this card and to which bank account)
• Card Product
• Expiry Date (MM/YY format)
• Account Type
• PIN Length
• Cardholder Name
• Cardholder’s City
• Card Status

example of emboss file(may very from vendor to vendor):

The fintech institution extracts the relevant information from their system, such as the encrypted PAN, expiry date, cardholder name, and card status, and populates the corresponding fields in the emboss file. The PAN is decrypted using an encrypted key to ensure security.

Once the emboss file is generated, it is sent to a printing facility where physical cards are produced with the embossed information. The cards are then distributed to the respective users.

Account Creation and Mapping:

Before a user can start using their card, the fintech institution needs to create an account for them. This is where APIs come into play. The fintech institution utilizes APIs provided by a switch, such as Visa or Mastercard, to create a new account and map the embossed card to it. This mapping ensures that transactions made with the card are accurately recorded and associated with the user’s account.

Transaction Processing:

When a user makes a transaction using their fintech card, the switch plays a vital role in routing the transaction to the appropriate entities. The switch acts as a central hub, facilitating communication between the fintech institution, the issuing bank, and the acquiring bank.

Here’s a simplified overview of the transaction flow:

1. The user swipes or taps their card at a merchant’s point-of-sale (POS) terminal.
2. The transaction details, including the card information and transaction amount, are sent to the switch via card network i.e. visa / Mastercard.
3. The switch identifies the issuing fintech institution based on the BIN and routes the transaction to them for authorization.
4. The fintech institution verifies the user’s account balance and checks for any potential fraud or security issues.
5. If the transaction is approved, the fintech institution sends a success response back to the switch.
6. The switch forwards the response to the acquiring bank, which processes the transaction and credits the merchant’s account.
7. The switch also notifies the issuing bank to deduct the transaction amount from the fintech institution’s account.
8. Finally, the fintech institution updates the user’s account balance and sends a notification to the user.

Throughout this process, APIs enable seamless data exchange between the involved parties, ensuring quick and secure transactions.

Conclusion:

Card embossing and transaction processing are essential components in the fintech ecosystem. By leveraging APIs and collaborating with banks and switches, fintech institutions can create personalized cards, establish user accounts, and facilitate smooth transactions. The emboss file format plays a crucial role in capturing the necessary card information, while the transaction flow ensures that funds are securely transferred between the user, merchant, and financial institutions.

As fintech continues to evolve, we can expect further advancements in card embossing techniques, API integrations, and transaction processing capabilities. These developments will undoubtedly shape the future of digital payments, providing users with even more convenient and secure ways to manage their finances.