How do banks aunthicate transactions faster?

[Teebang101]

Hi all,

I am not sure if I am posting in the right thread but please accept my apologies if I am. Well my question is simple I just wish to know how do the likes of fnb standard bank and absa authorise transactions in a pool of clients how do they make sure that an account is correctly debited and if there are any sufficient funds to proceed with the transaction on Point of Sale of retailers and what software's do they use?

Thank you!

 

[Thor]

If I'm not mistaken they reconcile each night. So technically transactions are not final until the reconcile. Something like that.

 

[Teebang101]

If I'm not mistaken they reconcile each night. So technically transactions are not final until the reconcile. Something like that.

Thank you Thor187 so what happens when you insert your card in a verifone device? How does the information in the card get verified in pool data on the server so quickly how does one get that decline sms once the transaction is not honoured so quickly?

 

[Thor]

The only one that can be of real help here is @Magicdude4eva

 

[VG008]

Simplified flow

The point of sale device (POS) sends the transaction to an acquiring bank (usually the bank that owns the POS).
The acquiring bank checks which bank issued out the card and sends the message to that bank via a third party (Bankserv/MasterCard/Visa).
The issuing bank will receive the transaction and will find the cardholder that owns the card. Their systems will perform checks (financial / non-financial / security) and either approve or decline the transactions.

There are various reasons as to why the systems are fast and will differ between banks

1. Huge servers / server farms & optimal hardware
2. Software and "database" is optimized. Store only what you need in the transactional system.
3. Many banks still use mainframes that are designed to efficiently handle payment messages. That's one of the reason the c programming language is still popular in financial companies.
4. The data sent to the various systems is very small. Around ~1000 bytes.

The actual money movement between the various role players are done via a batch system (over night usually). This what Thor is referring to.

 

[Rocket-Boy]

There are two types of card transactions that are done.
1st one requires a connection to the bank in which it checks available funds and makes the reservation on them.
2nd one is normally in places like a Spar etc where they have very high transaction numbers and generally lower values. In those cases there is a certain amount of data stored on the card which would indicate that there should be enough money left and that the transaction can proceed. Those are then processed in batches overnight.

The 2nd method has far more intricacies than I mentioned but I dont know all of them, its been a while.