22 Dec What is Account Number Truncation?
As the global marketplace has become more connected, safeguards that can protect a consumer’s identity are becoming more prevalent. One of the more common protections that governments and banks have worked together on are thieves stealing credit card information. Retrieving an entire credit card number would give a thief enough information to use this card for their own needs or to even access further personal information from the cardholder. After year’s of issues, governments and banks developed a key protection that most businesses must be compliant with: account number truncation.
What Is an Account Number Truncation?
An account number truncation is when the account number of the credit card appearing on a receipt is mostly blocked out. Before this financial practice, many receipts could have the whole credit card number printed on the receipt. That would mean that if the receipt was lost, a person could retrieve this receipt and have a person’s whole credit card number. With account number truncation, the credit card number is usually x’ed out except for the last four digits of the credit card. The last four digits are kept so that merchants could match receipts to payments by looking at those last four digits.
How Did This Trend Arise?
Many states passed laws that would force truncation of credit card numbers during credit card processing. Banks usually complied so any receipts from them would have credit card numbers truncated. However, many merchant accounts took awhile to comply with truncation. State laws and then federal laws, such as the Fair and Accurate Credit Transactions Act, have created conditions where merchant accounts will face harsh penalties for not truncating credit card numbers of receipts. Often, merchants can work with banks and financial forms to help the merchant’s purchase the right technology to comply with truncation.
Are There Exceptions?
Yes, some merchants may not need to comply with these truncation laws. Merchants that must write out receipts for credit card processing are exempt from truncation since the receipts will usually be copies of written out invoices.
Credit card processing has become much safer since truncation. If a receipt is ever lost and found by a malicious party, the chances the party could figure out the entire credit number with just the last four digits is statistically difficult. Although it has taken time and regulations, most merchant accounts are fully compliant with truncation. Credit card holders can rest assured that their credit accounts or identities will not be compromised thanks to truncation.