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Credit card numbers: what do they mean?

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If you’re like most people, you probably don’t pay much attention to the numbers embossed on your credit card. But have you ever wondered what purpose this seemingly random string of digits serves?

Credit card numbers play a crucial role in processing the billions of credit card transactions that take place worldwide each year. In this guide, we explore what they represent, how they’re created, and why they’re essential to safeguarding your card from thieves.

Key points about credit card numbers

You can find various numbers on your credit card, but the most crucial is the long sequence of digits on the front. Typically, you’ll see 16 digits, often split into groups of four. This series of numbers identifies the card issuer, payment network (such as Mastercard or Visa), and you, the cardholder.

Financial institutions and merchants use this number to validate purchases that you charge to your card and transmit the details quickly and accurately through a payment terminal. As such, this 16-digit number keeps your financial data safe while ensuring your payments are processed without a hitch.

Card issuers, such as banks and retail firms, assign credit card numbers based on the American National Standards Institute and the International Organization for Standardization (ISO).

The structure of the card number

Understanding credit card numbers requires knowing what each digit signifies and its role in authenticating transactions.

The first number
The first digit on your credit card represents the industry to which the card belongs and, sometimes, the credit card network and issuer. It’s called the Major Industry Identifier (MII). Here are some well-known MIIs and what they refer to:

  • 0 – ISO/TC 68 and other industries
  • 1 – Airlines
  • 2 – Airlines, financial, and other industries
  • 3 – Travel and entertainment (includes American Express)
  • 4 – Banking and financial (Visa)
  • 5 – Banking and financial (Mastercard)
  • 6 – Merchandising and financial (Discover)
  • 7 – Petroleum
  • 8 – Healthcare, telecommunications, and other industries
  • 9 – Government

The major credit card networks, Visa, Mastercard and Discover, have their own MII. As a result, you can instantly identify the network that most cards belong to simply by observing the first number. For example, if the first digit is 5, you know you’re looking at a Mastercard credit card.

American Express credit cards begin with the number 3, but this category also includes cards tied to other companies that operate in the travel and entertainment industry. Amex adds a 4 or 7 after the 3 to differentiate its credit cards from other issuers.

Numbers two to six. The next five numbers specify the financial institution that issued the credit card. This set is known as the Issuer Identification Number (IIN), sometimes called the bank identification number (BIN). Each bank has a unique code and may have multiple IINs. For example, here’s a list of the IINs for Visa cards provided by RBC.

Numbers nine to 12. This set of digits, excluding the last number represents your credit card’s account number. Your card issuer allocates this number to identify you as a unique customer.

However, it should not be confused with your actual account. Your actual credit card account number appears on your monthly credit card statement. Should you lose or damage your card, your card provider will send you a replacement with a new set of digits. But your account number will always stay the same.

The last number. The final number on your credit card is known as the check digit (or checksum). It’s derived from all the other numbers on your credit card using a mathematical formula called the Luhn algorithm (more on that later). The role of the last digit is to verify whether your card is valid when you conduct a transaction.

Credit card issuers in Canada

There are a wide range of credit card providers in Canada. Here’s a breakdown of some of the most common ones:

  • Bank of Montreal
  • Canadian Imperial Bank of Commerce
  • TD Canada Trust
  • Scotiabank
  • Royal Bank of Canada
  • National Bank of Canada
  • ATB
  • Desjardins
  • Home Trust Company
  • Vancouver City Savings Credit Union
  • Laurentian Bank
  • American Express
  • PC Financial
  • Canadian Tire
  • Capital One
  • KOHO
  • Neo Financial
  • Tangerine
  • MBNA
  • Rogers
  • Walmart

CVV and expiration date

The card verification value (CVV) or card security code is a sequence of three or four digits that provides extra protection against fraud and theft, primarily online. You can find it on the back of Mastercard, Visa, and Discover credit cards, and on the front of American Express cards.

When making an online purchase, you must enter the CVV during checkout to confirm that you’re the card’s rightful owner. Think of the process as a type of two-factor authentication. If someone obtains your 16-digit card number but not your CVV, they won’t be able to complete any online transactions using your card.

The expiration date notes the date your credit card will no longer function. Your account will remain intact, but you must acquire a replacement card to continue making purchases.

Credit cards have expiration dates mainly for security reasons. Like a CVV code, the expiration date is another validator to confirm the cardholder’s identity.

Security aspects of credit card numbers

Banks and retail firms take credit card security very seriously, as these shiny pieces of plastic are still prime targets for criminals. As a result, credit card numbers employ sophisticated chip technology to mitigate fraud and theft.

Today, credit cards use a security standard called EMV, which stores your card’s data on a tiny microprocessor. A one-time code is created to validate the transaction and transmit the required payment details. But once the payment goes through, the code is rendered useless. As a result, if a thief got access to it, they could not use it to determine your credit card number.

Importance of knowing your credit card number

Much like knowing how credit card interest works, understanding the meaning of credit card numbers will boost your financial literacy (always a good thing). You’ll become familiar with the safety measures that protect your financial data and reduce the chances of your card becoming compromised.

First, always keep your credit card number in a safe location accessible only to you. If you store your financial data digitally, make sure to encrypt it right away. An easy way to do this is to use a password manager, which allows you to store sensitive details in a cloud-based vault. The neat thing about password managers is that they autofill your credit card information when you shop online; you never have to type it in manually. As a result, it’s never visible to anyone who may have hacked into your device to observe your keystrokes. Consider installing antivirus software on your PC or mobile device for additional protection.

Second, only disclose your card number to third-party sources you trust fully. Never provide your credit card number over the phone if you doubt the caller’s legitimacy. And be on the lookout for phishing emails that ask for your number to “verify your identity.”

Third, when shopping online, be cautious about which merchants you visit. Only purchase from reputable sites with proper security features (look for the HTTPS prefix in your address bar).

Also, refrain from conducting transactions through a public WiFi network, such as at a hotel. These connections aren’t secure, which means your credit card number is exposed and at risk of being stolen by someone who may be monitoring the network.

How credit card numbers are generated: the Luhn algorithm

Most credit card numbers are generated using a mathematical formula called the Luhn algorithm, named after IBM scientist Hans Peter Luhn. Canadian banks and other credit card companies prioritize security when assigning credit card numbers, and this algorithm is one of the tools they use to minimize fraud.

In simple terms, the algorithm’s job is to determine whether a credit card number is valid. Your card issuer is responsible for assigning the other digits that make up your credit card number, which the algorithm, in turn, uses to generate what’s called a check digit.

During a transaction, the Luhn algorithm performs a series of calculations using the check digit and the other numbers on your card and sums the results of each. For the card to be valid, the sum of the sequence must equal a predetermined outcome. If not, the algorithm will automatically stop the transaction from proceeding.

Although not foolproof, the check digit reduces the likelihood of someone randomly guessing your card number. It also minimizes errors when you enter your card number (for example, misreading a 9 with a 6). The algorithm will detect a mistyped digit immediately and decline the transaction.

Frequently asked questions

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