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> Article <480@lawday.Dayton.NCR.COM> From: jra@lawday.Dayton.NCR.COM (John.Ackermann@Dayton.NCR.COM)
>ATM cards use a magnetic stripe because the machines actually write transaction
>info on on the stripe.  ATMs do this so that you can't go from machine to
>machine (some of which may not be online to your bank) and withdraw in excess 
>of your limit.  Each transaction decrements the daily limit value stored
>on the stripe. 

This is a used-to-was idea that was kicked around when ATMs were first
proposed.  They considered keeping your balance on the card so that an
offline ATM could still fork over the cash.  Due to the ease-of-fraud
that would be built into such a system, it was abandoned early on.
Track 3 is still read/write, but is not used for any financial information.

I believe that there is a proposal underway to write your "credit rating"
on the third track so that you (a cardholder) could have personal floor
limits more suited to your spending habits.

The cost of a credit transaction is primarily the phone call.  We have
it easy:  SNA links to Visa/Mastercard, AmEx, and Discover.  Not every
Mom&Pop, Inc. has that luxury, and is forced to make a phone call for
every transaction over a $40 floor limit.  If your card were encoded to
indicate that you paid your bills on time every month last year, spent
an average of $75 per transaction, maybe 10 transactions per month,
they could encode a "local" floor limit of $100.  The Point-Of-Sale
device wouldn't even make a phone call for charges less than that.

The reason Visa might consider such a system is that they would save
100 phone calls a year per customer described above.  Let's say that
one phone call costs Visa $.50.  Assume the risk of fraud and/or bad
debts in the customer category described above is less than $50.00/year
That translates into savings in reduced equipment capacity required,
reduced staffing of the WATS lines, fewer WATS lines, all while not
adversely affecting their bad debt losses.

(This information was published recently in Retail Info Systems News.)

-j, "...but I know my credit limit is supposed to be $100,000..."
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