FinTech Glossary

What Is the Luhn Algorithm

The Luhn algorithm is a simple checksum formula used to validate identification numbers, such as credit and debit card numbers, by detecting common data entry errors.

Understanding the Luhn Algorithm

The Luhn algorithm is widely used in payment systems and financial applications to verify number formats before processing transactions.

It does not confirm whether a number is genuine or authorised, but checks whether it follows a valid structure.

This method helps prevent basic errors during data entry or transmission.

How the Luhn Algorithm Works

The algorithm processes digits in a number sequence using a defined calculation method.

Certain digits are doubled, adjusted, and summed to produce a checksum.

If the final total meets the required condition, the number is considered valid under the Luhn check.