How Chip & Pin Transactions Work In Practise

HITCHENS

Brilliant info Mr Gently very grateful for it.

Just a couple of questions for you if you wouldn't mind.

communicates data to the central system or on-line processor (or stores it for batch processing if below the floor limit).

When communicate to the central system what do you mean? Do you mean the banks servers? or does the POS provider have a system that processes all the transactions that occur through it's "terminals" i.e. chip and pin device.

Also do you know 2 or 3 companies that provide these POS terminals. Good manufacturers of telephones to call you bank are Panasonic, BT, Binatone.

Dirk_Gently_2

IainHL wrote: »

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).

Correct, but whatever else happens the retailed gets their money from the bank.

If they didn't have the transaction guaranteed, retailers would never let anyone walk out of their premises with what they'd bought - they'd wait until the funds had cleared first.

So an authorised POS transaction is absolutely completely guaranteed to the retailer. That trust is vital to the whole system.

Dirk_Gently_2

HITCHENS wrote: »

Brilliant info Mr Gently very grateful for it.

Just a couple of questions for you if you wouldn't mind.

communicates data to the central system or on-line processor (or stores it for batch processing if below the floor limit).

When communicate to the central system what do you mean? Do you mean the banks servers? or does the POS provider have a system that processes all the transactions that occur through it's "terminals" i.e. chip and pin device.

Also do you know 2 or 3 companies that provide these POS terminals. Good manufacturers of telephones to call you bank are Panasonic, BT, Binatone.

In a supermarket or big retailer, the transactions would be kept on the store's local computer, and then uploaded in batch overnight to their head office for passing to Visa/Mastercard etc for transaction processing.

For smaller companies, that service would often be provided by their bank,so the terminal (or a PC it's connected to) would either store the transactions locally or the bank that they connected to would do the same.

Generally, though, for all except big companies, the whole thing is provided as a complete service - whoever does the processing tends to provide the terminals and any local software required. This might be the bank or might be an external supplier. Providers of tills and retail systems often have this as an add-on service.

There are lots and lots of them - try doing a search on "EPOS suppliers UK" to see some good examples. But an EPOS terminal on its own is no good to you - what counts is the software and systems it connects to.

HITCHENS

I see. Thank-you Mr. Gently most enlightening.

So effectively paying by chip and pin is a bit like a banker's draft/ cashier's cheque. It ain't gonna bounce like a cheque. The customer's bank pays the seller and if you don't have the funds clear in your account you are now indebted to your bank, irrespective of the dispute with the seller.

Valli

HITCHENS wrote: »

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

One manufacturer is Wincor Nixdorf.

Banks provide the Chip & Pin machines free of charge to very large retailers, I believe, but small retailers and independants do have to rent them, and this is why some have a minimum purchase level.