PDQ in the term PDQ machine stands for ‘Process Data Quickly’. The term was historically used in the earlier generations for Point of Sale (POS) terminals. Visa was responsible for bringing us PDQ machines in March 1980.
If you wanted to receive payment, you would first enter the amount owed by the customer into the machine. The customer would then swipe their credit or debit card through the machine so that the Magstripe (magnetic strip) could be electronically read. Magstripes are essentially invisible bar codes, but instead of being read by a laser, the magnetic bar code is read through metallic detection, where both the width of the stripes and stripe spacing are identified.
Next, the term ‘Process Data Quickly’ comes in. Upon reading the magstripe, the PDQ machine would identify the customer’s name, banking details, holding bank and also a quick objective check of the customer’s bank balance to ensure there was sufficient funds. If there wasn’t sufficient funds in the bank balance, a receipt would be printed to notify you, often in big bold letters. However, if your customer did have sufficient funds, a receipt of the amount owed would be printed from the PDQ machine. This receipt would include but not restricted to details such as the last 4 digits of the customer’s credit or debit card, type of card (Visa or MasterCard), expiry date, unique transaction ID, a short contract (I agree to make the payment etc.) and finally, a line with the customer’s name underneath. Customers would have to sign this short, legally binding receipt. Finally, as the payment receiver, you had to match the written signature to the back of the credit or debit card.
Multiple problems existed with the early payment process. First, there was an incorrect assumption that signatures were truly unique and could not be replicated. As we know, this is not the case; it is not very hard to remember and replicate someone’s signature on the back of the card. Secondly, these transactions would often be made in high-pressure environments such as restaurants or cafes’ where time is of the essence. Once the customer had put pen to paper, you had effectively received payment so it simply wasn’t in your interest to check the signature, as if you did, it risked losing the payment altogether. Finally and perhaps most crucially, it was extremely easy to defraud customers. All you needed was their card and a half-decent attempt at jotting their signature.
For each transaction, someone could very easily copy your card and all your vital details with a single swipe and then use this going forward. By relying on analog technology to make ‘skimming’ easy, this is where the merchant or fraudster would swipe the card in the space of a few seconds and duplicate the card after for fraudulent payments.
In summary, you can think of PDQ machines as the process of swiping credit or debit cards through card machines. This method is still used in some parts of Europe and the USA. A picture of sitting at an American diner comes to mind. My meal choice would be a sweet and savoury breakfast with fresh pancakes dripped in maple syrup, eggs, bacon, grilled tomatoes, butter toast, coffee and some fresh orange juice. It wasn’t long before new technology was developed to eliminate the long winded process of signing receipts and combating fraud. This came in the form of chip and pin in 1980. Read more about it here.