When You Swipe Your Credit Card, Does it Take Just the Numbers?

For the vast majority of people in the vast majority of situations, a debit card marked with "Electronic Use Only" is going to behave just like any other debit card. The phrase serves as a reminder of a time when card transactions weren't simple or quick – a time that card issuers would like to put behind them.

TL;DR (Too Long; Didn't Read) When your debit card says "Electronic Use Only" on it, this means merchants must use on-the-spot authorization with it.

What "Electronic Use Only" Means

The little machine you swipe your debit card through at the store has a name: a processing terminal. There's some high-tech hocus-pocus involved, but essentially, when you swipe your card, the terminal contacts whatever institution issued the card. The bank verifies the debit card is valid, checks that your account has money in it, and instantly authorizes the transaction. If your debit card says "Electronic Use Only," it means any transaction involving the card must receive this kind of on-the-spot authorization.

Why It's Needed

Perhaps surprisingly to those accustomed to swipe-and-go sales, not all debit and credit card transactions are subject to on-the-spot validation and authorization. When credit cards started to come into mass use in the 1960s, there was no instant authorization. A merchant took down the information printed on the card and submitted the sale for payment as part of a batch of physical charge slips, often at the end of the day.

That was common practice well into the '80s. Some merchants still handle their card transactions this way. Most modern merchants will only do it when they're forced to, such as when the processing terminals aren't working. They'll take the card information, make the sale, cross their fingers and hope that when they submit the charge later, it will be authorized.

In other cases, such as when you use a card to buy drinks on a plane, an instant authorization is impossible because there is no internet connection. In these situations, merchants are not supposed to accept "Electronic Use Only" cards, and the card issuer may deny payment.

What It's Good For

In general, "Electronic Use Only" cards can be used to make online, phone and mail-order purchases, in addition to on-the-spot transactions. Merchants making "remote" sales are usually able to obtain instant authorization, same as if you were going through a terminal, so these transactions qualify as electronic.

Specific card issuers, however, may restrict such purchases. If you want to be safe, check with your bank.

Why It's Smooth

Run your finger over the face of a typical credit or debit card. Those bumps you feel are retail history. Your name, account number, card expiration date and other information are embossed – that is, raised – because, in the days before instant online transactions, merchants collected card information by taking a physical imprint. Using a device nicknamed a "knuckle-buster" (if you've ever used one, you know why), they pressed the card against a carbon-paper form, which transferred the information onto the slip used to submit the charge for payment.