How credit card technology works?

Question

How it is working just within a second of swiping? And how it is blocked from the authority ? What is the technology behind this.

Answer 1

The technology is known as EVS or Electronic verification systems allow merchants to verify that the card is valid and the credit card customer has sufficient credit to cover the purchase in a few seconds, allowing the verification to happen at time of purchase. The verification is performed using a credit card payment terminal or Point of Sale (POS) system with a communications link to the merchant's acquiring bank. Data from the card is obtained from a magnetic stripe or chip on the card.

Several types of credit card terminals are available to merchants nowadays. Most have the same basic purpose and functions. They allow a merchant to swipe or key in required credit card information and transmit such data to the merchant service provider. Most newer models processes credit cards, gift cards, and are expandable to perform check verification. The majority of credit card terminals transmit data over a standard telephone line or the internet. Wireless terminal can transmit card data using either cellular networks or satellite networks. Some also have the ability to store data and transmit over a standard telephone line when one becomes available.

Answer 2

There's a lot of cryptography involved, to prevent people from stealing credit card information over phone or internet lines.

If you want to learn about how digital devices can communicate securely, read these:
http://en.wikipedia.org/wiki/Diffie-Hellman_key_exchange
http://en.wikipedia.org/wiki/Public_key_crytography
http://en.wikipedia.org/wiki/Stream_cipher