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Case-lesson “Credit card”
Case-lesson “Credit card”

Category: Economy and “wealthonomy”

Level (grade): 9-11

Subject: Successful business

Objective: To find out how does a credit card work, what are its advantages, possibilities and prospects.

What information is waiting for me here?

  • What are the working principles of a credit card?
  • Who is considered an owner and who is a proprietor of a credit card, and why?
  • What kind of information is recorded on a credit card and how is it protected?
  • What fundamental and practical knowledge will I need?
  • When did the first credit cards appear and what did they look like?
  • How does their cost form?
6 scans of the subjects, phenomena and practices:

Every time we use a credit card, complex informative and physical processes occur that we don’t even think about. After all, we are more interested in how much is written off, is sum shown correctly and what residue we have left.


So how does a credit card work, not only in terms of economy but also technologically, physically and informatively?


The plastic card has become a commonplace attribute. With the help of it we pay, receive salaries, scholarships and pensions. How does the process of payment and crediting work?

First of all, bank plastic cards are “tied” to one or more current accounts in the bank. These cards can be debit or credit ones. Debit cards are used for disposal of your own money, held in the current account in the bank. Credit cards are used for the disposal of bank's money, that is automatically borrowed from the bank (it is necessary to return it later). How not to get confused about who is the card owner and who is the holder? A small dictionary-crib will help you with it:


Banks do not issue cards just as they please. Most payment cards have a certain standard of ISO 7810 (Identification Card) ID-1 format – 86 × 54 mm – and use as a magnetic strip or a chip as a data medium.

On the front side of the card any image (graffiti, paintings, photographs) or simple background can be placed. In addition, the following items are also present: logo of the payment system, card number, holder's name and card expiry date.

On the reverse side of the card a magnetic strip, paper strip with the holder's signature and on some cards CVV2-code or its equivalent are placed. This is Card Verification Value 2 — three-digit code used for authentication of the card in the payment system Visa. Other payment systems have similar technology. It is applied either on the strip for the holder’s signature after the card number or after the last 4 digits of the card number. It is used as a protective element.


By issuing the card, the bank opens the tied to the card bank account; and the card becomes a convenient “interface” to this account. But this account can be accessed in a traditional way – by pointing its normal bank requisites in payment documents. Sometimes it is necessary. For example, when using transfers of funds between different payment systems. Typically, for depositing of funds on this account interest is not provided, or provided purely symbolically. The exception may be social cards (for example, for pensioners).

Where do banks receive a card number from? It is a digital code on the front of the card and is often prominently embossed on the card. It’s been done for a possibility of making a slip (imprint) of the card. The card number contains useful information: it has an encrypted code of the bank-owner (the issuer), payment system code, the release region, the control code.


Credit card numbers are usually composed of 16 digits, but there are 13- and 19-digit numbers. 19-digit numbers are usually assigned to the additional cards issued to a single customer account; the 13-digit numbers can be seen on old, previously issued cards.


Have you ever experienced using a credit card? Has it often been blocked and why? What was the type of the card?


The card stores information using the magnetic tape or chip. What are the processes, laws and principles involved in this operation?

A card with a magnetic tape runs on the principle of magnetic data recording. The material with the desired properties is called ferromagnetic; it is used in manufacture of the magnetic tape and thin magnetic film. Recording information on the magnetic strip is performed by magnetizing tiny particles on the surface of the strip, which contain iron (magnetic material). Reading of information is done by slipping the magnetic strip over the magnetic head.

Magnetic tape is a flexible substrate of polyvinyl chloride or other substances. It is coated by a working layer of a magnetic lacquer composed of very fine acicular particles of iron or other ferromagnetic material and binders.

Permanent magnets can be made from a relatively few substances, but all substances, placed in a magnetic field, are magnetized, i.e., become sources of the magnetic field themselves. As a result, the magnetic induction vector in the presence of a substance is different from the magnetic induction vector in vacuum.

The reason why different bodies own magnetic properties was found by the French scientist Ampere. Firstly, he suggested that the Earth’s magnetism is caused by currents passing inside the ground. The crucial step had been made: the magnetic properties of a body could be attributed to circulating currents within it. Then Ampere had come to a general conclusion that the magnetic properties of a body are determined by closed electrical currents inside of it.

According to his hypothesis, elementary electric currents circulate within molecules and atoms. If the planes, in which these currents circulate, are arranged randomly in relation to one another due to thermal motion of the molecules (Fig. 1), their actions are mutually compensated, and the body expresses no magnetic properties. In the magnetized state elementary currents in the body are oriented so that their actions are summed (Fig. 2).

Magnetic fields can be created by ferromagnetic materials not only as the result of electrons’ rotation around nucleuses, but also because of their own spinning.


The peculiar torque (moment of momentum) of the electron – is spin. An electron always rotates around its axis, and, owning a charge, creates a magnetic field, along with the field, appearing due to its orbital motion around the nucleus. In ferromagnetic materials there are areas with parallel spin orientations, called domains; domain size is about 0.5 microns. The parallel orientation of spins provides minimum potential energy.

If ferromagnetic material is not magnetized, then the orientation of the domains is chaotic, and the total magnetic field generated by domains is equal to zero. When an external magnetic field is included, the domains are oriented along the lines of the magnetic induction of this field, and the induction of the magnetic field in ferromagnetic materials increases, becoming thousands and even millions of times greater than the induction of the external field. What impact does the magnetic field make on a charged particle? This action was explained at the end of the XIX century by a Dutch physicist H. A. Lorenz. The very force of impact received a name of Lorenz force. He found that this force is always perpendicular to the direction of motion of the particle and magnetic field force lines in which the particle moves. In which direction the force acts is demonstrated by the Left Hand Rule: If you place your left palm in a way so that the four elongated fingers would be pointing the direction of motion of the charge, and the magnetic field force lines would be coming into the palm, the thumb will indicate the direction of the Lorentz force acting on a positive charge (Fig 3). If the particle charge is negative, the Lorentz force is directed in the opposite way.


Acting at the right angle to the velocity of the particle, the Lorentz force can neither accelerate nor slow its movement. It only bends the particle trajectory, causing it to move in a curved line.


Why are high temperatures dangerous for your credit cards? This phenomenon can be explained by Curie temperature. At temperatures greater than some definite one for a certain ferromagnetic material, its ferromagnetic properties disappear. This temperature is called the Curie temperature, named after the French scientist who had discovered this phenomenon. If we heat a magnetized nail strongly enough, it will lose its ability to draw metal objects. The Curie temperature of iron is 753C, of nickel – 365°C, and of cobalt – 1000°C. There are ferromagnetic materials whose Curie temperature is lower than 100°C. This is why the heat is the enemy of credit cards.

The magnetic tape is manufactured of a flexible basis, one side of which is coated by a working layer – suspension from thin ferromagnetic powder in special lacquer. Between them an intermediate layer can be applied. It provides better clutch of the base and the working layer. The working layer itself can consist of a few layers with ferromagnetic powder of different composition. Besides, sometimes another layer is applied over the working layer. This is an antifriction one, used for reducing friction when the tape is moving, is made of, for example, colloidal graphite. The total thickness of the tape ranges from a few to tens of micrometers, width is from few millimeters to 100 mm and more, depending on the purpose. The tape is supplied for subsequent use most often coiled into a tight roll on the core or coil.

The base of the magnetic tape is made of synthetic materials, which usually consist of cellulose acetate (e.g., diacetate and triacetate), polyethylene terephthalate (Dacron) and polyimides. Other materials are used as well: paper, celluloid, polyethylene, polyvinyl chloride, but they are now almost out of use, as they have the worse ability to meet the requirements for magnetic tape.


Powders of oxides of iron, chromium, cobalt, and mixtures of them, as well as powders of pure metals are also used as a working layer. The basic characteristics of the tape strongly depend on the composition, thickness and uniformity of the working layer, and on the size and shape of the magnetic powder particles.


And from what the card itself is made? A plastic card consists of two layers of white or metalized plastic and two layers of transparent laminate. Plastic can be of different thickness and different shades. The thickness is usually 0.3 mm (standard plastic) and 0.15 mm (thin plastic).

In terms of variety of shades, plastic can classically white, white with a bluish tinge and white with a yellowish milky tinge. Still, sometimes the plastic color can slightly affect the further shade of plastic cards, printed on it. By using different printings of plastic, the unique appearance of the product, unordinary color shades, interesting effects, etc can be achieved.

What is the process of plastic cards manufacture? This is a complex multi-step process (specifically implemented to prevent forgery, with a large number of protective levels):

One of the most important stages of the card manufacturing is lamination. Lamination is a technological process during which plastic sheets with an image printed on them are placed in a laminator and under high pressure and high temperature are “sintered” with sheets of transparent laminate. Laminate, just like plastic, vary in thickness. There is thin laminate of 0.06 mm, standard of 0.08 mm and thickened – of 1 mm. To produce a standard plastic card manufacturers use laminate of 0.08 mm thickness.

Thus, if to produce a standard plastic discount card, it will have a final thickness of 0.76 mm. These parameters correspond to the international ISO 7810 standards.


Information is recorded on the magnetic strip of a card. How does the recording happen?

In the production process manufacturers record noise on the magnetic stripes. Owing to the presence of some patterns in the noise (noise signature) it is possible to distinguish the original strip from its copy. A card reader reads the noises and defines their signature. The noise signature can be used to enhance the security of a payment system, together with authentication at ATMs and terminals.

The magnetic tape has a width of 9.52 mm and is located at 5.66 mm distance from the card’s edge. The stripe is divided into three tracks. Usually, there are 210 bits per inch of the first and third tracks’ lengths (recording density in the SI system is 8,268 bit/mm). Recording density on the second track is 75 bit/inch (2.953 bit/m).


Each track may contain 7-bit alphanumeric characters and 5-bit digital characters. Each track has its “author”. The format of the data stored on the 1st track is created by the International Air Transport Association (aviation industry). The format of the data stored on the 2nd track is created by the organization “American Bankers Association”. The format of the data stored on the 3rd track is created by Savings and Loan Association.

Magnetic strips, which are standards compliant, are supported by the majority of cash registers and run on conventional computers (which can be programmed for specific tasks).

In addition to cards with the magnetic, chip-based cards – smart cards – are used. How do they work? In the majority of cases smart cards contain a microprocessor and operating system, which control the device and give access to objects in its memory. Moreover, smart cards usually have the capability to conduct the cryptographic calculations.

Smart cards can be used as electronic wallets. The smart card chip is loaded with information on funds with which an owner can pay in a variety of retail outlets. Cryptographic protocols protect the exchange of information between the smart card and the ATM. If there is no direct relationship with a bank, the operations with the card are performed in offline mode, unlike when using magnetic cards that make a request to the bank, and it authorizes card transactions.


However, there are also fully “digital” cards. Many modern banks issue virtual cards. A virtual card is a bank card without a material medium, electronic mean of payment, designed to perform individual operations exclusively through the Internet (using the card details, CVC2 or CVV2 codes).


To receive a virtual card a client gives the bank his funds in the amount of desired initial virtual card limit. It is necessary for registration it as electronic funds. Holders of such cards cannot convert their funds to cash, except the case of the closure of a bank account.

In this area, there are some widespread options of fraud.

1. The magnetic stripe is copied by a special device – skimmer. Then a duplicate card is made, and all the further required information if a card PIN code. To achieve this, the skimmer is usually paired with a hidden video camera. If an attacker conducts the operation himself, he can appear as a waiter or a seller and try to spy on the PIN. Even more technological option is when an input reader device is connected to the input device.

2. Also to gain personal data various phishing websites or mailing that provokes card holders to input their private information (CVV2 or CVC2, etc.) are used.

3. Another option is when criminals spoil the card reader so that the card is jammed there. When the owner leaves the malefactor appears and takes hold of the attacked card.

4. Carding is also a variation of fraud. In this case, the attacker submits the database of the online store or any of the online banks and withdraws money from all cards to which he has managed to gain access.

5. Shimming (from the English “shim”). Special thin devices are used. They are almost imperceptible: thin, flexible boards with thickness of about 1 mm are inserted through a slot of a card reader and read the data from the entered cards, allowing a criminal to steal the card number and its PIN code.


How to protect the card from fraud?

To protect cards themselves and information, recorded on them, from unauthorized access and usage different levels and elements of plastic cards protection are applied. Conventionally, they can be divided into several categories.

Mechanical protection. It is aimed, first of all, on the protection of cards from forgery, damage and wear during the usage:

1. Lacquering of the cards. After production and filling of plastic card it is covered with a special UV varnish, which reflects the ultraviolet radiation and prevents the card’s recordings from forgery, abrasion, fading and tarnishing. The lacquer coating can be glossy or matte. It is used on plastic cards that do not envisage long-term use.

2. Lamination of cards. The process consists of coating the surface of the manufactured and filled card with a special thermofilm and sintering it with plastic. Laminated cards have a higher abrasion resistance than lacquered ones. Prior to lamination to the surface of plastic, in addition to plain text, magnetic stripes, holograms, microchips and even GPS-sensors can be applied.

3. Scratch strip. It is a protective metalized coating, under which service confidential information is kept. It is often used on cards for telephony services payment, the Internet bills and so on. Scratch strip is “brushed off” by a coin edge. This is cheap one-time data protection.

Personalization (personal protection) is designed to impede or eliminate the possibility of credit card forgery and prevent the use of a lost or stolen card by third parties. In the process of manufacturing the plastic card it is being “bound” to a particular person – the owner of the card. For this purpose, the numeration or embossing of certain card and its owner’s data is done, as well as the assignment and application of bar- and pin- codes, signature of the user-customer and other information to the card.

1. Numeration. It is one of the simplest methods of personalization, which contains a number and series of a card, as well as a full name of its holder and some service notes.

2. Embossing. It is numeration, made by stamping. Often this embossed data is covered with metalized (similar to silver or golden) coating.

3. Strip for a signature. It is a special field on the electronic card, on which a sample of an owner’s signature is applied. Usage of the card is permitted only with the full coincidence of the original signature and its image. Typically, this field is protected against erasing and editing the sample of the signature by special methods.

4. Barcode. It is encrypted in the form of alternating black and white stripes of varying widths card and its owner’s information. It is read with the help of optical photocells.

5. Magnetic strip. It is used to store and read specific information in electronic (analog or digital) format. Outwardly it looks like a thin metalized strip. The information can be stored on it for from several months to decades. It is used to protect the card from forgery, for identification and authentication of the card.

6. Microchips. They are used for recording data about user and service information (card and user statuses, types and conditions of the services provided, etc.) electronically.

Elements and levels of protection of plastic cards, at first glance, duplicate each other and bear the same information. However, the methods of their application and reading are different. At discrepancy of the same data encrypted in various ways, the plastic card will be automatically locked until the clarification of the circumstances of failure of its identification. It also protects the interests of its owner in ambiguous situations.


Which of the data mediums on plastic cards have you encountered more often? What do you think, why?


The history of banking credit cards began in 1951. The first bank card was created in 1951, in a small New York bank Long Island Bank. A Franklin National Bank in New York developed the more advanced for those years payment technology, which allowed to commence the dissemination of the first credit cards, similar in service scheme with the modern cards. In the same year, the British company Finders Services gives out the first credit card in Europe.


Milestones of the history of credit cards are the following:


There is an interesting story concerning magnetic plastic cards. In 1960, for the US Government, IBM developed a way to store information reliably and securely on plastic cards. An engineer, working at the IBM laboratory, was trying to stick the magnetic strip to the plastic card the whole day long. But the strip deformed because of the glue’s impact, and it became impossible to read the information. In the evening, the engineer returned home and shared his failures with his wife. The wife was ironing clothes and suggested trying to fuse the strip into the plastic card with the help of an iron. The engineer conducted a “test”, and the method proved successful: the heated iron had melted the top layer of the plastic card. The adhesion between the plastic and the strip was sufficient enough for these materials to couple.

But cards with chips have come later. An automated card with a built-in chip was invented by German engineer Helmut Gröttrup and his colleague Jürgen Dethloff in 1968. The patent was finally approved only in 1982, and the first mass use of such cards occurred in France for telephone bills payment in 1983.

Smart cards have also been embedded into personal identification process and documentation at the regional, national and even international level. These are civil cards, driver's licenses and medical documents.


For example, in Malaysia ID card MyKad, which include 8 different functions, is owned by 18 million inhabitants. Contactless smart cards are also being implemented in biometric passports in order to increase the level of security in international travels.


Would you like to use such ID-card? What its functions would you like to see in it?


A credit card allows you to pay for goods and services without using cash. It also allows you to cash money. But the card itself is worth some money, too, as it is spent on its manufacture and maintenance. What are the expenses of the bank owning the card?


So the credit card is not only a profit for the bank, but also expenses. But whether it will be useful for you depends on your reasonable approach to spending money.

Despite the fact that the card manufacture requires certain expenses, different banks implement various marketing strategies concerning this issue. Some banks sell these cards as a commodity, getting a small profit from them. Other banks issue these cards to customers for “half price”, suffering a certain loss, but believing that by doing so they acquire customer’s loyalty. The third type of banks not only issue the cards for free, but also put a certain amount (100-500 UAH) on the account, assuming that customers will begin to actively use the cards, will constantly add money to their accounts, increasing the turnover of income and expenses, and bringing the bank increasing profit.

Lesson summary:


The contents


The results of the case-lesson can be complemented with findings of students



What three websites have helped find important information






To help student and couch:






Where can you get information for the case?











Location of the lesson:

The case-lesson takes place in the classroom. It is possible to conduct the lesson at museum or library.



Teams of boys and girls.

The score was:….


1. Charge direction is 45 degrees (look at J on a protractor). Where the Lorentz force will be directed for the positive and negative charges? The magnetic field force lines are directed downwards.

2. Think of a “concept” of a credit card. What functions should it perform, which data medium should it include. Think about its design.



 Formulate 5 questions to the case (an individual task).



90 min (double lesson) 



The possibility to conduct the lesson with a student-understudy:  



The acquired knowledge and developed competence:

Knowledge about the underlying principles of credit cards operations.

Knowledge about the technological methods used in the manufacture and use of credit cards.

Acquiring concrete knowledge in physics, economy, chemistry and other branches (given in the scans).

Getting practical skills in acquired information application.



credit card, magnetic tape, chip, induction, magnetic field, Lorentz force, polyethylene, polyvinylchloride, cellulose, noise signature.



 Hrabowska Larysa Leonidivna


Participated in the case upgrading:



The End

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