How Chip & Pin Transactions Work In Practise

HITCHENS

Hi guys,

Okay this question isn't about the technology behind chip & pin. Let me use an example to illustrate what I would like to know.

A owes B £100. B programs this into the small POS device, A checks the amount, inserts their debit/ credit card and enters the PIN. What I want to know is.

1) Is the money transferred from A to B's account instantly or is there a delay?

2) Who handles the transaction? Does the manufacturer of the POS device request money from A's account or is it B's account provider that requests it. Does A's bank send the money directly to B's account or does it go via POS device/ handler.

3) What are the name of the companies that manufacture and prvided those POS devices you find in shops.

4) Is it possible, in practise or theoretically, for A to cancel the payment to B after they have entered their PIN and removed their card, if for example the goods/ services B provided are crap and they refuse to refund.

Thank-you all for reading and your help.

forgotmyname

Doesnt matter who makes the device. Once its manufactured and sold its nothing to do with them anymore.

Sometimes its trasnferred instantly but there are exceptions. I bought something from ASDA at the weekend and they didnt take the money until the Thursday for some odd reason. Normally i come home and the funds have gone.

The bank or whoever provides the machine to the company transfer the funds. A bit like paying for something online.

You enter your details and click buy. Then its bought.
Insert card insert pin and its yours.

The retailer or company will have to refund you. Same as buying something from the supermarket and getting a refund.

You cannot cancel the payment after you paid. If the goods or services are not upto scratch you should chec 1st where possible. After you bought it you need to claim a refund from them.

I guess too many complaints and the people who supply the machine may not trade with them anymore.

StuC75

Depends if it is an online \ offline processing card (i.e. Trains & Airplanes are not always instant... because they may not have live connection).. also the amount of the transaction can impact what does happen - some have a ceiling limit over which they look for full authorisation.

A live transaction would get authorisation from the card issuer, and which point that 'amount' would be pending - with the full transaction sometimes taking a few days to complete.. thats why some supermarkets takes a couple days to complete..

Any disputes you have,need to be put to the bank in first instance since they would advise of what procedures are in place .. this would vary if it is a debit or credit card transaction, if its overseas and ultimately what the transaction is for - eg products, services..

If you explain the context of your question you may get a more appropriate answer..

StuC75

you would need to better quantify 'crap' products - were they as described, authentic etc.. quality can be upto own interpretation..

HITCHENS

Thanks for your reply. So basically for-

1) You don't know the answer. Sometimes for you it's been instant on other occasions it hasn't. Do you mean it didn't show up on your statement until Thursday or the actual payment didn't leave till Thurs.

2) You don't know the answer. If B has an account with RBS for example do RBS provide, service, administer the Chip and Pin devices we use every day?

3) You don't know the answer.

4) You think you can't cancel. But for example the ASDA payment you're talking about you said there was a 4 day delay till Thursday. If you withdrew all the money from the account during those 4 days and you had no overdraft ASDA wouldn't have got the money.

Btw, I'm just curious as to how it works I haven't bought anything rubbish and was refused a refund or anything like that.

Tixy

HITCHENS wrote: »

But for example the ASDA payment you're talking about you said there was a 4 day delay till Thursday. If you withdrew all the money from the account during those 4 days and you had no overdraft ASDA wouldn't have got the money.

Asda would still be paid. Your own bank would either make the payment putting you in to an unauthorised overdraft or would have the payment as a pending transaction meaning you were unable to withdraw the entire balance from your account before Thursday.

1) Is the money transferred from A to B's account instantly or is there a delay?

There is always a delay in the money appearing in B's account (typically 2-3 working days). Sometimes it leaves A's account immediately, sometimes it can take a couple of days. Rare (but possible) for it to be any longer than the next working day.

HITCHENS

Thanks Stu75,

The context is just curiosity of how it works. Forget about the "crap products" it was just an example as to why you may want to cancel a payment.

When you say live connection what do you mean? Connection between whom? the POS device and their bank? The POS device and the customer's bank? Between the two banks?

What do you mean ceiling limit? I 've never paid by chip and pin and been asked for further authorisation than a PIN number

If it helps, let's say its in the UK. It's under a "ceiling limit" whatever that this. It's a 'live connection'. It's for a piece of electronic equipment from a supermarket paid by a debit card.

Does anyone know the answers to those four question I orginally posted?

Thanks.

HITCHENS

Thanks Tixy,

Question 1) has been answered.

balmk

This refers to internet transactions, but the principle is the same for chip and pin transactions:

http://www.practicalecommerce.com/articles/168-Credit-Card-Processing-How-It-All-Works

Dirk_Gently_2

HITCHENS wrote: »

1) Is the money transferred from A to B's account instantly or is there a delay?

2) Who handles the transaction? Does the manufacturer of the POS device request money from A's account or is it B's account provider that requests it. Does A's bank send the money directly to B's account or does it go via POS device/ handler.

3) What are the name of the companies that manufacture and prvided those POS devices you find in shops.

4) Is it possible, in practise or theoretically, for A to cancel the payment to B after they have entered their PIN and removed their card, if for example the goods/ services B provided are crap and they refuse to refund.

Assuming this is all on-line and the transaction is above the shop's floor limit, so it's on-line authorised :

1. The transaction value is flagged against the buyers account, and the sum marked as pending - i.e. deducted from their available balance. The seller gets the value a 2-3 days later, after the processor (which may be their head office or may be an agency like world pay) submits the transaction - these are typically done by overnight batch processing, and the transactions are reconciled after that.

2) It's just like credit card processing - the bank, head office system or merchant system processor submits a transaction to the buyer's bank. The POS system is basically a terminal and nothing more - it handles validation (chip and pin) and communicates data to the central system or on-line processor (or stores it for batch processing if below the floor limit). It's what that connects to that has the intelligence not the local device itself. POS terminals can connect to multiple systems at the back end.

3) See above. Far too many to list here. It's like asking "who makes telephones that I can call my bank with?"

4) The only equivalent way to do that through a POS terminal once the initial transaction has completed is to issue a refund equal to the existing transaction. But an authorised transaction is like a cheque with a cheque card used to be - guaranteed to be paid. Without that guarantee no shops would use them ....
Perhaps a payment can be manually cancelled via the bank etc, but once the POS transaction not completed then it's done for good.

IainHL

HITCHENS wrote: »

4) You think you can't cancel. But for example the ASDA payment you're talking about you said there was a 4 day delay till Thursday. If you withdrew all the money from the account during those 4 days and you had no overdraft ASDA wouldn't have got the money.

Incorrect.

One of two things would happen. If the transaction had been authorised at point of sale you would notice those funds were no longer available in your bank account for you to use. In Halifax telephone/online banking this is the difference between "actual balance" and "available balance". So you would not be able to empty your bank account and leave insufficient funds in there, so Asda would get their money.

If the transaction was below the thresholds and had not been authorised at point of sale then the bank would honour the transaction, and Asda would still get their money. You, however, would then be into unauthorised overdraft territory for which you would get charged. This used to be called "card abuse" by the NatWest system which I always found slightly quaint (and the reason there were insufficient funds was the charges they were tkaing out of my account in the meantime).