Part I: Magnetic stripe debit and credit cards

This part includes only Chapter 2. It analyzes debit and credit payment instruments as they are currently implemented with magnetic stripe cards. First we outline the general picture of electronic payment systems, identifying the participant roles and their business interactions. In this context, we concentrate on the magnetic stripe implementation of a debit/credit card and we discus the content of the financial data recorded on its magnetic tracks. Then we analyze the processing performed by the terminal on the financial data captured from the card for completing a transaction carried out at the point of service. We consider the security mechanisms that can be put in place for this type of card, and we identify some of the security threats that make them vulnerable to certain types of attacks. This security analysis aims to show the need of chip migration, which will better enforce the security of the participants in a payment system. Finally, we offer a high level view of the authorization, clearing, and settlement processing, which represent the backbone activity of any payment system that facilitates the business interaction between issuers of the payment cards and the acquirers of payment transactions collected from merchants .