A SEMINAR REPORT ON

CREDIT CARD VALIDATION SYSTEM (CASE

BABALOLA KAFAYAT OPEYMI

HND/18/COM/FT/086

&

ABDULGANIYU MAFUZ ABIOLA

HND/18/COM/PT/087

SUBMITTED TO
DEPARTMENT OF COMPUTER SCIENCE

INSTITUTE OF INFORMATION AND COMMUNICATION TECHNOLOGY

KWARA STATE POLYETECHNIC, ILORIN IN PARTIAL FULFILLMENT OF

SUPERVISED BY:

DR. RAJI A.K

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 CERTIFICATION

This is to certify that this seminar was carried out by BABALOLA KAFAYAT

OPEYEMI with matriculation number HND/18/COM/FT/086 and ABDULGANIYU MAFUZ

ABIOLA with matriculation number HND/18/COM/FT/087. This seminar has been read and

approved as meeting part of the requirements for the award of higher national diploma in

computer science.

___________________ _____________________
DR. RAJI A.K Date
Supervisor

_________________________ ________________________
DR. RAJI A.K Date
(Head of Department)

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 ABTRACT
Credit card validation system (sample of master and visa card) using luhn algorithm is a system
that will serve as a more reliable and effective means of requesting and validating of credit card.
It is discovered that customers faced various problems such as queuing up during credit request
and validation, delay in processing of validation form, unavailability of some key staff while
processing card validation. This has led delay of credit card validation and inability to complete
the tedious manual process of request. This research work therefore focused on the
implementation of credit card validation system to minimize the shortcomings of the existing
system. Hence the proposed system will be develop in Software Application which makes use of
the following C# (CSHARP) as the programming language due to its user friendliness while
MYSQL is used as the back end (Database).

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 Introduction

Credit card acceptance enables merchants to sell goods and services to customers who
increasingly choose electronic forms of payment over other payment types. During the last
decade, debit card transactions grew rapidly in most advanced countries. Credit cards have
increasingly become the preferred methods for consumers to pay for goods and services, making
these forms of electronic payments an indispensable way for merchants big and small to conduct
business (Pooja & Dhande, 2017). The trend of rising usage is predicted to continue for some
time. Credit card transactions surpassed more than 50% of all non-cash transactions by 2006, up
from 42% in 2003, according to a tri-annual study by the Federal Reserve. This research work
will be of benefit to all banking system which will allow every user to generate and validate their
credit card easily and of help to individual which easy their stress of not visiting the bank hall all
time for card credit card validation and pin generation.

The credit card business got momentum in the sixties and a number of banks entered the
field in a big way. Credit card culture is an old hat in western countries. In India, it is relatively a
new concept that is fast catching on. The present trend indicates that the coming years will
witness a burgeoning growth of credit cards which will lead to a cashless society. Credit has
become an important vehicle of trade promotion. Credit cards provide convenience and safety to
the buying process. One of the important reasons for the popularity of credit cards is the sea
change witnessed in consumer behaviour. Credit cards enable an individual to purchase products
or services without paying immediately. The buyer only needs to present the credit cards at the
cash counter and sign the bill. Credit card can, therefore, be considered as a good substitute for
cash or cheques (Yogesh and MrSushil, 2015).

A credit card, as the name indicates, enables the cardholder to enjoy credit from the
issuing bank for a specific period after the purchases. During this intervening period, the
cardholder is allowed to use the card for incurring further expenses.6A bankcard is used to make
an electronic withdrawal from funds on deposit in a bank, as in purchasing goods or obtaining
cash advances. Credit cards are one of the most popular forms of payment for consumer goods
and services in the United States (S.Bulomine Regi, 2016).
Credit card is a beneficial financial instrument which helps consumers to get financial resources
for current consumption redeemable in future date. The first type of credit card was made on

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8thFebruary, 1950. It was known as the Diners club card. These diners card were used for the
credit purchase which was issued in the early twentieth century in the USA. These cards were
basically used for travelling and entertainment purpose. Later on it gave the idea of an
international card that can be used for credit purchase around the world. Due to this, credit card
emerged at a very fast pace around the globe. Most of the studies on credit cards have been done
in developed economies. Credit cards are popular as a medium for exchange of transactions.
Credit cards make it easy for the household and personal spending to take place even in many
developing countries (Watkins, 2000). The benefit of using credit card which attracts most of the
customers is its acceptability around the globe. It also relieves the need to carry much cash,
maintains an accurate purchase record, facilitates refunding of merchandize, it entertains
customers by awarding attractive reward points which can be redeemed and in case of theft it
gives an option to reverse the transaction. Apart from all the benefits listed above there is a major
drawback of credit card is that it leads to a common habit known as “Compulsive Buying”.
Consumers of credit cards become victim of excessive purchase on debt that has an adverse
impact such as addictive shopping and unnecessary debt. Multiple research proved that a card
holder would spend more compared to using cash in an identical situation (Feinberg R. A.,
1986), (Hirschman, 1979), (Prelec & Semeter, 2001).
Statement of the Problem

The method of card validation is very tedious in the sense that to obtain a card there is
need to go to bank hall and fill form customer will past through some tedious procedure just to
validate card and it’s time consuming. Several applications has been developed using window
base to generate and validate customer credit card which customer need to go to the bank hall to
activate. To make card request, validation and pin generation easier for all bank easier, this
platform will be suitable in the sense that for every customer who want to request for card or
generate pin can do that on this platform without any stress or waste of time or delay.

Literature Review

Credit card is the product that allows its users to borrow money for payment from a merchant
and pay back in future date. Credit card is an automated way to offer consumers credit that
would be paid by banks. Credit cards were firstly evolved after 1920 when oil companies and
other big firms started issuing cards which ensure future payment by the consumers.

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(Encyclopedia britannica, n.d.) But its wide use started from 1938 when companies started
accepting each other’s’ cards. (Belis, n.d.) Banks started issuing credit cards in year 1946, when
John Biggins of the Flatbush National Bank of Brooklyn launched its first credit card. With the
evolution of modern technologies, Credit cards were issued in Plastic hard card which bears
particular numeric values contains 16 digits. It includes user’s information which is directly
connected with main database of the company. The barcode stripe is detected by the detecting
skimmers which are placed by the banks and it consists of user information. Numerous
researches have been done on the frequent use and adoption of credit card internationally but
there are limited researches conducted on the low usage of plastic money in a developing country
like Pakistan and the gap is yet to be identified. This provides us with an opportunity to identify
why people are reluctant in adopting plastic money even though it offers many features and
benefits.

In most of developed countries the usage of credit card has been high compared to the
developing countries. They act as a vital payment tool for the consumers all over the world
(Feinberg A.1986), (Brenthal, Crockett, & Rose, 2005). American Banker Association estimated
that every second around 10,000 payment card transactions are made all over the world. In the
past ten years the value and amount of card – based payments has accelerated in various
developed countries such as US, U.K (Settlements, 2003), (Klee, 2006). Consumers are more
likely to pay for their groceries with credit card in various supermarkets such as Tesco, Asda and
Sainsbury (Guibourg & Segendorff, 2007), (Humphrey, Willesson, Bergendahl, & Lindbolm,
2006), (Amromin & Chakravorti, 2009)indicates that the use of cash has declined in many
countries and there is a significant drop off. A research done on the credit card usage among the
affluent users in China concludes that the Chinese are comfortable being accompanied by using
credit card (Wothington, Stewart, & Lu, 2007).

Methodology

ADAPTATION OF LUHN ALGORITHM WITH THE SYSTEM

GENERATE user’s Credit Card Number

GET user’s Credit Card Number

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SET total to 0

LOOP backward from the last digit to the first one at a time

IF the position of the current digit is even THEN

DOUBLE the value of the current digit

IF the double value is more than 9 THEN

SUM the digit of the double value

ENDIF

SUM the calculates value and the total

ELSE

SUM the current digit and the total

ENDIF

END Loop

IF total% 10==0 THEN

SHOW Number is Valid

ELSE

SHOW Number is Invalid

ENDIF

The propose system will be develop in Web Application which makes use of C# (CSHARP) as
the programming language while MYSQL is used as the back end (Database)

Research Discussion

Though it facilitates the benefit of delaying payments, but these delays or default ends up with a
penalty of huge interests which piles up your payments. Mismanagement and Misuse of this
facility is a major downside. The worst case scenario of this debt can take months, years or even
decades to overcome the financial burden. According to the USA Federal Reserve Board’s

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Survey of 2007 related to Consumer Finance, 46.1% of families carry these kinds of credit debts.
The result of this debt leads to bankruptcy. For instance in the year 2009-2010 the personal
bankruptcy filing was about 1.6 million but it is down by 12% in the year 2013 from its previous
year and the statistics show that the current personal bankruptcy is around 1.1 million. (States,
2009-2013).
In order to achieve the objectives, research design acts as a blue print and guides the researcher.
This research is Quantitative in nature and Explanatory approach is used. The reason of using an
explanatory approach is that it helped in clarifying the misconception of credit cards among its
holders. With the help of statistical tools we adopted and modified the close ended
questionnaires that helped us in quantifying our research.

Population

The total Population of Pakistan is 220 million. Out of which 2.6 million are having a bank
account in a commercial bank. These figures are available on the website of State bank of
Pakistan. Among these 2.6 million bank accounts holders, only 0.9 Million are active credit card
users. The population for our research is the active as well as inactive card holders. We
conducted the research within the geographical boundary of Karachi. The reason for choosing
Karachi as the city is that, it is within our reach and because of the budget constraint to keep the
cost within our feasibility.

Sample and Sampling Method Quantitative studies usually have a larger sample size as compare
to the Qualitative studies. We have used a sophisticated approach of calculating the sample size
which is the Confidence Interval Approach at a ±10% margin of error with 95% confidence level
which gave us a sample size of 96. However we distributed around 105 questionnaires as we
were not sure how many individual will respond, so just to be on the safe side we distributed a
few more than the targeted number. The random sampling method is used with close ended
questionnaires which were provided to the active and inactive credit card users to find out the
underlying factors that lead them towards the usage or adoption of credit cards or drive them
away from using the credit cards. The participants are selected on the basis of Random sampling
approach under Non- Probability sampling techniques which was done on the basis of
convenient sampling. The reason for selecting this approach is that we approached those
individual who were within our geographical boundary and were easily accessible and available.

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RESULTS

Reliability
Case Processing Summary

CASES N %
Valid 26 96.3
Excluded 1 3.7
Total 27 100.0

Table 1: List wise deletion based on all variables in the procedure.

SOURCE: Dinesh L, Talekar and K. P. Adhiya (2014) “Credit Card Fraud Detection System”

Cronbach's Alpha N of Items

Table 2: Reliability Statistics

SOURCE: Dinesh L, Talekar and K. P. Adhiya (2014) “Credit Card Fraud Detection System”

The Reliability test helps in measuring the degree to which the variables and results are unbiased.
It helps in determining the consistency among the various variables that are Awareness, Cost,
Functional Dimension, Religious Belief and Socio-psycho. Hence Cronbach’s Alpha is used for
the measurement of reliability and consistency. The above results show that we have obtained
the value of Cronbach Alpha of 0.885. The minimum desired value should be 0.7. Hence the
reliability and consistency of the statistical data is proved to be very high. The results of the
study provide evidence of the construct validity of the test as the study measure the constructs
that theoretically linked with each other and the construct which are not theoretically related with
each other, in fact observed to be linked that means there are convergent between the similar
constructs, and also observed to not be linked that reflect the discrimination between the
dissimilar constructs.

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Conclusion

This research indicates the fact that, like many other products, awareness plays a key role in
adoption of credit card facility. This shows the fact that consumers are more inclined to adopt a
product if they are well aware of the product. Different packages and discounts expand the
volume of credit card usages. Banks should concentrate on providing packages like discounts on
purchases, bulk purchases or advertising. Moreover, usage of credit card is also influenced by
different cost factors like interest rate fee and volume of credit available for consumers. The
study shows that volume of credit card usage is inversely proportional to the cost factors in credit
card. Religious factor have a low impact on the adoption of credit card facility and socio –psycho
has negative impact. This shows that credit card facility is mainly dependent on the utility that it
provides to its consumers. This also indicates that banks should enhance the convenience factors
in advertising credit card to its consumers.
Most often credit cards can provide convenience but it can also land in debt through unwise
choices or through no fault of the own, such as an emergency. In order to overcome the risks of
credit card use, avoid accumulating too many and pay the debt off on time, read terms and
conditions carefully and take measures to avoid fraud. Credit card which is my product has a
negative impact on people because on the way they used their credit card. consumers think that
using their credit cards for online shopping or other necessary things they might need to buy is a
good thing, but they are actually wrong because is bad thing. They might not know if someone is
taking their money and then might have to pay the overdrew of the credit card they have. Some
other negative impacts are that consumers may continuously roll over the balance for several
months. Also when consumers default on credit card payments, it’s charged with late fees and
interest increasing the debt load.

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