Introduction

As you slowly progress forward in the store, you watch as you move toward the client reaching in their pockets and taking out a small plastic card and swiping the card in the device. A matter of seconds later, a receipt is printed and they walk away, only to be replaced by another client.

We have all followed this same process time and time again. We take this operation for granted and get upset when the entire process takes 20 or 30 seconds longer than usual. When the merchant cannot take the point of sale transaction, we must revert to actually using money; what a pain and inconvenience! We have come to the point where we take these actions as the norm. In fact, only a short time ago, the world was quite different. Then transactions were all done by cash or check. This method of transaction was easier for the merchant, as there was typically little question about whether the funds were valid. When transactions are done in cash, the transactions are typically quite quick.

Over time, we have found ways to provide an effective and efficient way to eliminate the need to carry cash and move towards a cashless environment. This was not easy and several requirements needed to be fulfilled before it could be successful:

Speed

The transactions had to be quick. This required that methods of servicing large numbers to client quickly must be created.

Secure

The transactions must be secure and there should be very little potential for invalid transactions be passed across the network.

Valid

Transactions must be checked to ensure that the card is valid and that the person presenting the card is whom they represent themselves to be. This requires that the account be checked both against a stolen card database and that the necessary funds are available in the account. Together, these factors formed the basis of a widespread set of networks and Facilities that service millions of people every day. The general population now accepts these events without noticing them or recognizing that amazing things are going on in the background.

POS Transaction Description

The following Page describes what happens "behind the scenes" when you perform a POS transaction. As an observation, it is actually quite amazing to realize the complex interactions that occur out of sight1. Electronic funds transfer at a Point of Sale (POS) terminal is the process of paying for goods and services with a medium other than cash or cheque. The medium will be in form of both credit and debit cards.

Any of the POS devices could be equipped with PIN pads. The Issuer switch will drive these terminals via the Network Access Controller (NAC) or Bay Network RAD (Remote Access Device). In terms of network topology, the POS terminals will have telephone connections to the local PSTN, and they will use dial-up access to connect to NAC devices or RAD (Remote Access Device). The NAC devices & RAD (Remote Access Device) will be connected to the Authorizer (Host) machines via Ethernet, and communication will be based on the TCP/IP protocol and the ISO8583 message format. Any other POS terminal required to be connected to the network and function with the Issuer switch system has to support the ISO8583 message format. This ISO8583 message format will be the base on which any transactions will be processed between the POS terminal and the Issuer switch system.