The Cardis solution extends existing debit or credit card products into the micropayment segment through Micropayment Buffering (buffering) - aggregation technology invented by Cardis that eliminates fixed processing costs per transaction and provides for convenience and efficiency in making micropayments.

Buffering manages micropayments in conjunction with a chip card's debit or credit function. It uses a small stored-value purse on the card to hold the unused portion of a previous credit or debit transaction. The purse can hold up to a Load amount defined by the personalization parameter on the card (e.g. $40). For each card the issuer defines the valid range for Load amount (minimum and maximum) and the actual Load amount. The consumer can change the Load amount parameter within the valid range. POS terminals contain a parameter Maximum Micropayment which determines maximum transaction amount that qualifies to be processed using the card’s micropayment function (e.g. $15).

At point of sale, if the purse balance on the card is higher than the purchase amount, the transaction is completed by transferring stored value from the card to the POS terminal (off-line, no PIN, optional receipt). If the purchase amount is higher than the purse balance, the consumer is prompted to authorize a $40 credit/debit purchase transaction with his PIN (charge). The difference between the $40 charge and the purchase amount is returned to the purse (change). This transaction is often referred to as a “Charge-and-Change” or “Load” transaction.

Example
If the purse balance is $3 and the purchase amount is $5, a debit transaction ("charge") for $40 is completed and stored value "change" of $35 ($40-$5) is returned to the purse. As a result, the ending balance in the purse is $38.

The economic effect of buffering is distribution of the fixed per-transaction costs over the buffer size (i.e. $40). Processing of even the smallest transaction becomes profitable with fees acceptable to merchants. The issuers and acquirers experience the micropayment volume on an aggregated basis through standard debit/credit load transactions (e.g. $40). Individual micropayment transactions are local stored value transactions between the POS terminal and the card. They are aggregated offline, and are not part of any processing or settlement in the backend system (micropayment settlement in the Cardis system is based on totals and does not require processing of individual transactions in the backend system). Accordingly, a micropayment transaction bears only a portion of the processing cost of the original load transaction. For example, a $4 micropayment transaction bears only 10% of the transaction processing cost of the original $40 load transaction, while a $0.40 transaction bears only 1% of the processing cost of the original $40 load transaction. Charge-and-Change also eliminates the need to install and operate loading stations that are common in electronic cash solutions.

Charge-and-Change ensures speed and convenience in processing micropayments. Most transactions are off-line stored value transactions and the card is reloaded at point of sale when needed. The consumer never fails to make a purchase due to insufficient stored value balance on the card.