You may be so accustomed to see those little magnetic strips on plastic cards that you give no thought to what information about you might be in those strips.
The magnetic strip (also referred as a magnetic stripe) has the ability to store data. To do this requires changing the magnetism of tiny particles that are iron-based.
These particles are encased in the magnetic material and the information they relay is displayed with the use a magnetic reading head.
You’ve heard the term “swipe your card” from cashiers and it is the magnetic strip they are asking you to “swipe” through the card reader.
There are international standards that define the properties of the card and these include the size and flexibility as well as where the magnetic strip is located on the card. The standards apply to all cards carrying a magnetic strip, including financial cards.
History of the Magnetic Strip
IBM developed the process of applying a magnetic strip to a plastic card in 1960 when it worked on a security system under a U.S. government contract.
Originally, the developer wanted to attach a magnetic tape to the plastic but the tape tended to warp. Another problem was the adhesive used to attach the tape to the card as properties in the adhesive interfered with the data stored on the strip.
It was the developer’s wife who came up with a working solution. She suggested ironing the magnetic tape to the card. The heat was enough to bond the tape and card together without affecting the data embedded in the magnetic strip.
Deciding what information to store on the magnetic strip was perhaps the easiest part of developing the process. It was necessary to create international standard for the process that would specify what information and format would be used and to choose codes to define certain parameters of information.
Testing the cards and gaining pubic acceptance was the next step and was followed by developing steps for manufacturers to use to produce the magnetic strip credit cards in large numbers and with reliable accuracy.
Last, equipment had to be made available to retailers and banks to read the credit card magnetic strips.
The first magnetic strips were available in two coercivity ratings. The LoCo strips were brown in color and less expensive than the HiCo version which was almost black.
Initially, many companies opted for LoCo due to cost but consumer complaints about damaged magnetic strips led companies to move to the more durable HiCo strips which are commonly used today.
These cards are not only used for credit cards but have been adapted to replace paper tickets and even hotel keys. Cheaper versions of the process are used for cards that are meant to be used only a few times.
Three Tracks
Though there may be three tracks on magnetic credit cards that can be used to store financial data, the third track is not used by large credit card providers.
The card readers in bank kiosks and retail stores read track 1 or track 2. The information that is necessary to complete a purchase with a credit card is on both tracks in case one becomes damaged.
Track 1 contains the name of the account holder and the account number. This account number is usually the same as the number printed on the front of your credit card.
The expiration date of the card is included as well any PIN verification number used. The purpose of track one is to provide the basic information about the person who was issued the credit account.
Track 2 is information is the same information provided in a slightly different format developed by the banking industry.
Both tracks include a space for a three digit service code where the range of services and the process for authorization are listed. The first digit pertains to banking interchange rules and the second digit to contact procedures for the lender.
It is the third digit on the service code that tells a retailer how a card can be used by the account holder. There may no restrictions to using the card or a PIN number may be required.
You may be able to pay for goods and services or may have a card limited to ATM use. Your card may allow cash transactions or not. Each of the service codes is assigned a simple number from 0-9 which simplifies what is an extremely complex process.
Summary
You may be so accustomed to having plastic cards with a magnetic strip that you seldom think about what is actually stored on the magnetic strip.
The information is everything needed to identify you as the person who was issued the card and to allow banks and retailers to process financial transactions quickly and accurately.
If you remember the old credit cards that required a retail store to use a manual press to process a sale, you will realize how much the information on a credit card magnetic strip has changed the way we live today.
However, as with everything else in the world there are disadvantages as well. Today, the biggest one is the increased credit card fraud which is a big threat to magnetic credit cards.
