Credit Card Numbers Fun

Since a new school year is upon us, I thought I'd share some interesting credit card facts so that you can get your math brain going.

Luhn formula

A credit card number must be from 13 to 16 digits long. The last digit of the number is also known as the “check digit”. This number is calculated from the Luhn formula (a.k.a Modulus 10) from the other numbers.

1. Start with card number
2. Drop the last number (check number)
3. Double every other number in the string
4. Sum all numbers
5. Multiply by 9
6. The last digit of the result is the check number

I know, that's a lot of steps right? Good thing we have the algorithm built-it to gateways and payment terminals!

Ready for more numbers?

Credit Card Validity

Here is another algorithm used to determine the validity of a credit card.

1. Take the credit card number
2. Double every other digit from right to left starting from the second to last number (meaning, exclude the check digit)
3. Sum up all the double digit numbers (i.e. 14 becomes 1+4) to make single digit numbers
4. Add all the numbers up, including the unaffected numbers from the original
5. If the result if divisible by 10, then the credit card number is valid

Try it at home with your credit card numbers!

Beyond Validation

As mentioned above, a credit card number has 13 to 16 digits.  The first 6 digits of the the number is the Issuer Identification Number (IIN) or sometimes called Bank Identification Number are the first 6 digits of the credit card number.  The IIN no only tells you what kind of credit card it is (e.g. Visa, MasterCard, etc.), it also contains issuing bank information.  With an American Express card, you can even tell whether the card is a business or a personal card.

Using IIN to Prevent Fraud

IIN can be used to prevent fraud.  For example, IIN from foreign countries deserve a closer look, especially in light of other transactional information, such as billing/shipping/ IP address.  Also, once you confirm a case of fraud, make sure to go back and look at similar transactions.  We recently came across a case where a merchant saw suspicious orders around the same time all with cards with the same IIN.

5 Fraud Prevention Tips for the Holiday Season

The holiday season is well underway. Better late than never, just wanted to remind everyone of the simple things that can be done that can go a long way. None of these require any new tools except a little of common sense.

Here are some tips that are quick and easy to adopt to help you deal with holiday fraud headaches.

1. Address matching: although this might be hard during the holiday season, especially when lots of grandmas are shipping to little Johnnys everywhere, this still can be used as the basic filtering criteria to automatically flag transaction for manual review.
2. Watch out for overnight shipping: it is perfectly understandable to pay extra overnight or express shipping when it's 2 days before Christmas.  However, if a customer is paying a lot extra when there is plenty of time to spare, then that raises a red flag.
3. Provide GREAT customer service: a lot of times chargebacks can be avoided if customers can easily return or exchange an item.  So make a point to make it easy for customers to reach you and reverse the charges through YOU and not their bank.  This means having lenient policies, providing clear instructions that encourage customers to contact you, sending confirmation emails after order and processing requests promptly, etc.
4. Collect signature or delivery confirmation: whenever possible and definitely when it involves a high price ticket item.
5. Automate basic screening: (see #1) so that you have time to do manual review of orders that require more attention.

Hope these tips put you in a holiday fraud fighting mood!!