Magnetic stripe technology has been a fundamental component of data storage and transmission since it was first developed in the 1960s. Commonly known as “magstripe,” this technology is the force behind credit cards, hotel room keys, gift cards, and identification badges that play pivotal roles in our everyday lives. However, as we move further into an age characterized by smart chips, digital wallets, and contactless payment systems, what role does magnetic stripe technology play? This article explores the history, functionality, applications, and prospects of magnetic stripe technology.
A brief history of magnetic stripe technology
The story of magnetic stripe technology dates back to the 1960s, when IBM engineer Forrest Parry developed a method of encoding data onto a magnetic strip, which could then be embedded in a plastic card. By the 1970s, credit card companies began to adopt magstripe technology to store payment and account information, fundamentally changing how consumers accessed and utilized credit.
Since then, magnetic stripes have become nearly universal. By embedding data onto a magnetic strip, companies could provide reliable, low-cost, and durable data storage solutions that fit onto compact plastic cards. This made magnetic stripes ideal for applications in identification, payment systems, and access control, which continue to be essential to their function today.
How does magnetic stripe technology work?
Magnetic stripe technology uses a small strip of magnetic material, typically iron-based, embedded on a card. Point-of-sale systems commonly read track 1 or track 2. Sometimes they will read both in case one track is unreadable.
This strip is divided into three tracks, each capable of storing specific types of information depending on the use case:
- Track 1: Used mainly by financial institutions, storing cardholder information such as name and account number.
- Track 2: Holds the card’s account number and expiration date, used primarily in bank card applications.
- Track 3: Not as commonly used, but can store more detailed data.
When you swipe a card through a reader, the magnetic material on the stripe interacts with a reader’s head, generating a unique sequence of electrical pulses that the reader converts into binary data. This data is then passed to a system for authentication, ensuring that the information on the card is valid before processing a transaction.
Applications of magnetic stripe technology
Though magstripe technology may seem like an outdated solution in today’s world of digital innovation, it is still widely used due to its cost-effectiveness, simplicity, durability, and established infrastructure.
Magnetic stripe technology can be found on:
- Plastic gift cards
- Rewards cards
- Credit cards
- Magnetic stripe key tags
- Membership program cards
- Access control cards
A shift toward new technologies
While magnetic stripe technology has been incredibly durable and resilient, it’s not without its drawbacks. Data stored on magnetic stripes can be easily accessed or cloned, making them vulnerable to fraud. This has led to the adoption of more secure technologies such as EMV (Europay, Mastercard, Visa) chips and contactless RFID/NFC payment solutions, which offer stronger encryption and are harder to duplicate.
The future of magnetic stripe technology
Magstripe technology is not likely to disappear. Its simplicity, cost-effectiveness, and compatibility with legacy systems make it an attractive option for industries and regions where transitioning to newer technologies may be cost-prohibitive or impractical.
Backup use cases: In situations where chip or contactless technologies are unavailable, magnetic stripe technology can serve as a valuable backup, ensuring users can still access their accounts or gain entry as needed.
Niche applications: Magnetic stripe technology remains relevant for applications like loyalty cards, magnetic stripe key tags, access badges, and gift cards.
Magnetic stripe cards present an excellent choice for retailers due to their affordability, durability, longevity, and user-friendliness. Vanguard ID Systems provides custom card solutions like gift cards, membership cards, loyalty cards, hotel cards, and more, all of which can be seamlessly integrated with a magnetic stripe.
Vanguard ID Systems is a leading manufacturer specializing in custom-made card solutions and RFID technology. Our range of custom card solutions includes gift cards, loyalty cards, and direct mailers, all of which can effectively enhance the exposure of your brand and attract a wider customer base. Our RFID technology solutions are designed specifically for your business needs, enabling you to enhance efficiency and profitability throughout your organization. Our personalized RFID solutions include labels for inventory management and asset tracking, and bands and cards for access control to name a few key areas. Contact one of our Vanguard ID Systems Technical Representatives today at 1-800-323-7432 or email us at info@vanguardid.com
