The Luhn algorithm (or formula...or “modulus 10,” as it’s also known) is a formula that checks for errors in identification-related numbers when they’re transmitted, like credit card numbers, and various types of ID numbers all over the world.
This type of error-checking is called a checksum. As you could imagine, the checksum formula for all of our ID data is...kind of important. In fact, the Luhn algorithm is so important that it’s been patented since 1960, though it's public domain for widespread use.
While the Luhn algorithm is no match for hackers, it's a simple and much-needed step in transactions to minimize errors and keep things running smoothly. The Luhn algorithm is one of those things that affects you all the time, but that you didn’t even know existed...and that you would be much more aware of if it didn’t exist.