#1126 How does the magnetic strip on a credit card work?

How does the magnetic strip on a credit card work? A magnetic strip has three tracks that hold all of the information pertaining to a card by magnetizing tiny iron particles.

We have probably all seen a credit card with a magnetic strip and we have all heard that you shouldn’t keep your credit card with your phone, but credit cards no longer use a magnetic strip. However, they are still used by a lot of point cards and other less expensive types of cards. Credit cards actually use a chip to store all of your information these days. Magnetic strips do still exist on credit cards that have already been issued, but Mastercard and Visa are phasing them out as of 2024. Chips are easier and safer.

How does the magnetic strip work? The strip on the back of the card is less than a centimeter in width. It is made of iron particles that are trapped inside a plastic film. Iron particles are used because iron is ferromagnetic. Ferromagnetic materials can become magnets and are very strongly attracted to other magnets, easily following a magnetic field. Out of all the metals on Earth, iron is the most magnetic. Inside the plastic film, the iron particles are arranged into three horizontal tracks and each track is used to hold different information.

To write information onto the card, a card writer uses a magnet to magnetize some of the iron particles so that their north pole is pointing up and leaves the other particles unmagnetized, so their south pole is pointing up. In this way, it can hold huge amounts of data in binary form. A magnetized iron particle is a 1 and an unmagnetized particle is a 0. This is how data is stored on cassette tapes as well. When the card is swiped in a card reader, the reader simply picks up the 1s and 0s and translates them into all of the information that it needs for the transaction.

The tracks in the magnetic strip contain the account number, country code, name of the cardholder, the expiration date, a service code, and the pin number for the card. When you swipe the card, it will ask you for the pin number, which the terminal can check against the card’s information. If that is correct, the terminal will contact a central card processor, which will send the signal to the correct card network, which will then send the signal to the card issuer. The card issuer will check the cardholder’s account for sufficient funds, or check the card’s limit, and then decide whether to authorize the transaction. This decision will then go back along the chain to the terminal you are using, which will pop up with “authorized” or “not authorized”. This only takes a few seconds but is the reason why you have to stand there feeling nervous whenever you use your card.

The magnetic tape was first invented in the 1920s by a German engineer called Fritz Pfeulmer. He worked out how to store data on it magnetically. The magnetic strip on a card was invented by an IBM engineer in the 1960s. His name was Forrest Parry and he was trying to make ID cards for CIA officials. American Express was the first company to put them on credit cards in the early 1970s.

Credit cards are switching over to a system called EMV chips. EMV stands for Europay, Mastercard, and Visa, which are the three largest credit card firms, and the backers of this system. Magnetic strips were a great idea when they were invented in the 1960s, but they are not as secure as a chip. Anyone with a similar card reader can take the information off a card. Some criminals put a device called a skimmer in places where cards would be used and it “skimmed” the magnetic data off the card. The criminals could then program the same data onto a different card and use it to buy things. Magnetic strips are also easy to scratch or damage. You can also change the information if you put them close to a strong magnet. Mobile phones are very strong magnets and if you keep your credit card with your phone, it will mess up the data. This is why it is never a good idea to keep a hotel key card in one of those pockets in your phone case. EMV chips store the data digitally and each time the card is used, the EMV chip creates an encrypted, unique digital signature. Anybody trying to skim the card data would only get the number of the last transaction, which will never be used again, and thus of no use to them. It is difficult to damage the data on a chip, as well.

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