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Magnetic Stripe Credit Card Overview and Examples

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Created on
May 5, 2023


What’s Inside

Magnetic stripes on credit cards store digital data on a strip of magnetic material. The strip stores a small amount of data, such as the account number, cardholder's name, expiration date, etc. IBM introduced magnetic stripes in 1960 to make credit card purchases speedier and allow greater use of computers. With the increased use of credit cards by airlines, banks and retailers, a faster data entry technique was necessary than wiping carbon paper over embossed digits!

Data can be entered into a computer with a single swipe by encoding data on the magnetic stripe. It's the same as typing the same information into the computer, only faster. The low-cost card readers that are now available resemble a second keyboard for your PC. When you plug it into a USB port and swipe a card, the computer reads the output as if you were typing it in.

Magnetic Stripe Cards Security

Magnetic stripe cards have a few advantages, notably the ability to modify their codes through factory reprogramming. They integrate images and text and have a wide range of applications, including various identification cards. However, magnetic stripe cards pose greater security risks than EMV chip cards.

Magnetic stripe cards are used to store static data in a magnetic field. This static data is easy for fraudsters to steal and use to create cloned cards. Fraudsters can and do build devices called skimmers that can quickly scan magnetic stripe cards.

In contrast, EMV chip technology makes it incredibly difficult for fraudsters to construct a cloned card. The data on the chip card is continually changing, making extraction difficult. To retrieve cardholder data, a fraudster would need expensive equipment that could modify the physical chip circuit. Furthermore, many chip cards necessitate PIN entry for each subsequent transaction. This must be entered while the card is still in the machine, adding another difficulty for scammers.

Wrapping Up

Whether you are a retailer or a magnetic stripe credit card user, you should be able to identify "skimmers". Keep an eye out for "card readers" that don't look like the ones you're used to seeing, especially at petrol pumps or ATMs. Skimmers are typically larger than standard card readers since they may be placed over a legitimate card reader.

If you are careful, you can enjoy the benefits of credit cards without being affected by the numerous risks associated with credit cards.

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Frequently Asked Questions

1. What are magnetic stripe cards?

A magnetic stripe card has a magnetic stripe that holds data. Magnetic stripe credit cards, unlike smart cards, are passive devices with no circuits. These cards are also known as swipe cards since they are read when swiped through a card reader.

2. How do magnetic stripe cards work?

A magnetic stripe, often known as a magstripe, is seen on the back of a credit card. The magstripe comprises small iron-based magnetic particles held together by a plastic-like layer. Each particle is 20 millionth of an inch-long bar magnet. Your card also has a magstripe on the back and a spot for your signature.


Fi Money is not a bank; it offers banking services through licensed partners and investment services through epiFi Wealth Pvt. Ltd. and its partners. This post is for information only and is not professional financial advice.
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Magnetic Stripe Credit Card Overview and Examples


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