Hello Everyone,
When I was a kid I remember my parents using (very rarely) their credit card, a Visa, Mastercharge or maybe a store charge card like Sears. Back then (1970s) the stores didn’t use swipe terminals, instead the transaction was processed manually using an imprint machine. How did the seller back then know if the card was good and not stolen? Also, how did the store know what your credit limit was and how much available credit you had left. I don’t remember the clerk calling on the phone for approval although I do seem to remember them occasionally looking in a book like a magazine for something. I’m not sure if they were checking to see if the card was valid or what.
These questions are really bugging me now, because i can’t seem to figure out how they did it.
I used to take credit card payments back in the days of the imprint machine. Where I was working, in New Zealand, our bank would guarantee up to a certain amount, so anything up to say $500 we could process with no authorisation. Anything over that amount and we had to ring the card company for an authorisation number. Not a big deal really and I don’t recall having trouble with stolen cards or anything.
The merchants were supposed to check their “hot sheet” – it was a booklet of lost/stolen credit card numbers that was mailed to the merchants every week or so. After they started putting the magnetic strips on the back of the cards, some merchants got phone lines with card readers and acoustic couplers that would call a number to check the card. And as time progressed, some merchants even got hardwired data terminals.
Each merchant was also assigned what was called a “floor limit.” If the amount of the purchase was under the floor limit, they could just go ahead and accept the card after checking the hot sheet. If it was above the floor limit, they were supposed to call their processor to get an approval number. The floor limit depended on the type of business, volume of charges, and typical size of a charge. Back in those days they did not have prepaid cards or debit cards that required verification for every transaction.
You’ll note that the system allowed a credit card thief to make a lot of small purchases for a couple of weeks with a stolen card and that people could get away with a bunch of small purchases after they passed their credit limit before the bank would take the more drastic action of hot-sheeting them. That was considered part of the cost of doing business.
I seem to recall my father told me once that the shops usually would call the bank/card issuer if the amount was over a certain, store-set limit to verify, and that they could also call in to check if they become suspicious or just randomly for sums under this limit. This is no different as when paying with a cheque (or is it check) is it? The shop has no way of telling if the cheque will bounce or not unless they call the bank?
As for the stolen/fraud thing - wouldn’t the store also require some kind of ID in addition to the card? They certainly did this with cheques, as far as I recall.
We have the same thing even today - some types of places (like trains and busses for instance) only have simple swipe terminals where you don’t type a PIN, nor show an ID. I assume in these cases they’ve done the math and figure whatever loss they suffer from fraud is off set by the savings in processing time on a busy train or bus.
In the US, that’s still the norm for credit card transactions. The only identification is the signature, and transactions below a certain amount don’t always require that. (Some retailers ask for ID out of superstition/ignorance, but it isn’t actually a part of accepting the card, and the big credit card companies don’t allow them to require the ID.)
Circa 1976 I worked at a self-serve gas station. The imprinter was not easy to use. Moving the device one way embossed the station’s credentials on the slip, the other way imprinted the card info. A very stupid coworker went his entire shift only doing half of the required motions. He created a stack of slips with the gas station info but no credit card data. Dozens of people got free gas (52.9 cents a gallon) that day.
Kmart was the only merchant I ever recall doing this. They used these books up through at least the early 1980’s, and it was just one more unpleasant aspect of shopping there - especially when the Target a few blocks away had already streamlined their CC purhase process.
The mental weirdness was that the cashier had to make sure your number was NOT in the book. So after thumbing through this book to find the right page, he had to look for two 16-digit credit card numbers that bracketed yours without actually being yours. It always took a few extra seconds of scrutiny to make sure all of those conditions were met. Meanwhile, the people in line behind you were annoyed that you were using a credit card.
The merchant agreement was not much different than today.
If the amount was over the merchant’s limit - phone authorization.
If the limit was less, and the card was not in the current list of invalid (stolen) cards, then the merchant was OK. To guarantee the payment, the card simply had to be present and the card’s signature on the back had to match.
I remember that the places that actually checked the book most often were rural gas stations.
(I’m always amazed how few places still don’t check the signature for at least a rudimentary match)
Of course, the matching signature thing only came into play if the cardholder challenged the bill.
Trivia - much processing of credit card slips was outsourced to the Caribbean as credit card use took off. It was a short flight down to the islands. Keypunch operators who sat there all day punching those slips onto disk were significantly cheaper.
The customer and the merchant each got a copy of the swipe, if you were challenging the amount you had your copy. Dumpster diving for the carbons between the receipts became a common means of stealing credit card numbers, so carbonless receipts became more common.
The whole point of a credit card was that no other ID was necessary. The card present and signature matched was sufficient, and the credit card company guaranteeing payment backed that up. This meant store clerks did not have to be able to know and verify a hundred forms of ID. (My French teacher at the time complained that stores would not accept an official looking French passport with stamps and photo, but would accept the typewriter filled out cardboard drivers license in 1970.)
IIRC it was about mid-1980’s I started to see phone-modem enabled verification of credit card transactions.
I don’t ever recall my CC being checked in a book. I knew the books existed, and sometimes you’d see them hanging by the register. I guess I just didn’t look evil.
One aspect of the old paper method is that the CC companies would throw all the slips into plastic bags and ship them to the Philippines where rooms full of people would go thru them and key in the data. So it took a while for sale to get into the system. Those people are out of work now. Oh, well.
As a youngster I worked retail – there was one more innovation I remember between carbon and carbonless. For a while we used credit card slip that had perforated carbon sheets – half the carbon would stay in the slip when you separated the customer copy and half would come out. You threw away the half-sheet (with only half the credit card number on it) and the “store copy” had the other half.
We always checked the book at my father’s store. But we rarely had more than one person in line.
We started early, maybe around 1970. Used an imprinter and sheets with carbons between them. You’d snap them apart – there was a trick to getting the carbons all together – and there’d be three copies: one for the customer, one for the store records, and one for the bank.
Later, the carbons split as you pulled them, and finally the slips were NCR paper.
We had cheque guarantee cards, long before credit cards. The shop assistant would write the card number on the back of the cheque and it was then guaranteed up to £50. Transactions larger than that were either taken on trust (if they knew you) or they would phone the bank to see if you were good for it.
As a kid I got to hang out with my older sister at her dept store job one summer (circa 1976). They indeed had little paper booklets with all the stolen/revoked card numbers listed in numerical order, so as long as you could count you could check the numbers fairly quickly. I think they got new ones at least ever month (maybe more). My sisters *always *checked this so it wasn’t unusual or insulting to do so. Plus you could do it pretty quick & casually under the counter so the customers didn’t even notice it.
A big thing to remember is that having/using a *real *credit card back then like a Master Charge or BankAmericard (which is what Visa used to be called) as opposed to just a Sears or JC Penny card, was not nearly as common as it is today. And even more importantly, unless you were rich the credit limits on them were very low, just a couple hundred dollars usually.
I don’t know if it’s required, but a lot of places still have a dusty old ‘ka-chunk’ imprinter device in case their electronic credit card machine goes down. However unless the clerk is like at least over 40 they haven’t a clue how to use it!
B.V. or M. (Before Visa or Mastercard), I used to borrow Mom’s “charge-a-plate” to shop at our fancy downtown department store. After they made the card imprint, they would send the receipt via the pneumatic tube system to bookkeeping, where someone checked to see if the account was in good standing, approved the charge, and sent it back through the tube.
The “old credit card kachunk thingies” are also called “knuckle-busters.”
Here is what I remember. You would give your card to the clerk, who would first check it against a booklet of bad numbers. If the amount was over, I think, $50 (a considerable sum in those days) s/he would call the credit card’s authorization center and get an authorization that would be written on the receipt. Meanwhile they would put the card through the machine and you would sign it. Occasionally, they would compare the signature with the signature on the back of the card. It took forever, compared to cash. The first improvement was automatic dialing. Then a few merchants paid to be permanently connected to the authorization center, although I think if one clerk was using it, another would have to wait. It was still all done by hand, one person at each end of the line. Then the register was connected to the phone and the authorization was automated. Pretty soon all transactions had to be authorized, but it was fairly fast.
Nowadays, in Canada, almost all cards have embedded chips. You stick the card into the machine (the merchant never touches it) okay the amount, enter your PIN, wait a short time (rarely over 5 seconds) and then the display tells you to remove the card and machine prints receipts, one for you, one for the merchant. Now much faster than cash.
I had a gold American Express card for a while many years ago, back when they were cool things to have (in my case it was a complete waste of money in terms of annual fee vs. what benefits I actually used, but that’s a different story). It was back in the days of the KACHUNK! credit card machines. Back in those days if you had a gold Amex, Amex sent you their copies of the slips together with your statement, which WAS a handy benefit. That would be kind of tricky now! (Besides I’m sure they wouldn’t want to take the effort any more).
Bit of trivia - someone mentioned Visa used to be BankAmericard. That’s in the US (maybe some other places; I don’t know); in Canada it was Chargex. I still remember the ads - “Will that be cash or Chargex - <Kachunk kachunk>?”
