What is a 'Barcode'

A barcode is an image consisting of a series of parallel black and white lines that, when scanned, relay information about a product. Barcodes are read by optical devices such as a barcode reader or scanner. 


A barcode is used to automate the transfer of product information, such as its price, from the product to an electronic system such as a cash register. The lines in a barcode are separated by white spaces of varying degree.

The term can also be written as "bar code."

How the Barcode Is Used 

Barcodes allow retailers to easily track inventory if linked to a database. This helps companies track trends in consumer habits, order more inventory and adjust prices. If managed properly, they can help reduce the cash conversion cycle by lowering inventory and thus, lowering the day's inventory. Barcodes are on almost any product you can buy at the store. The most commonly used form of barcode is the Universal Product Code (UPC), first introduced in the 1970s for use in grocery stores. They allow stores to track inventory easily if linked to a database, which in turn helps companies track trends in consumer habits, order more inventory and adjust prices.

Barcodes can also be used in other applications such the healthcare industry to help identify patients and patient records. They can help disseminate important information like medical and prescription drug histories, allergies, and other patient data. Other uses include those in the postal service, travel and tourism (rental cars, luggage for airlines), entertainment (movie and theater tickets, amusement parks) and sports events. 

How to Scan and Read Barcodes

Barcodes can be read by different kinds of technology. Scanners are specially programed for transferring the data housed by the barcode to the application program, thereby reading the available information. An interface scanner connected to a computer transmits the barcode's information as if it was inputted on a keyboard. And new technology allows consumers to scan barcodes with their smartphones and tablets. 

History of the Barcode

The barcode was invented by Norman Woodland and Bernard Silver in 1952. It was patented that same year. The two men first dabbled with ultraviolet ink, but discovered that the ink faded and was too expensive to keep replacing. Woodland was later inspired by Morse code and drew his first barcode in the sand on the beach in the form of a series of dots and dashes, and he made narrow and wide lines out of them. He then adapted technology to devise a reader. 

Early Uses of the Barcode

It would take decades before the barcode became a commercial success. However, one of the first uses of the barcode was in the 1960s in an industrial context by the Association of American Railroads. It needed a method of identifying railroad cars automatically. The plan involved using a series of colored stripes on steel plates, which were mounted to the sides of the cars. Two plates were put on each car (one on each side), with the stripes identifying different information such as the type of equipment and the owners. A scanner was used to read the plates on the moving cars. Although it proved somewhat useful, the system was abandoned because it was unreliable for any long-term use. 


  1. Quick Response (QR) Code

    A Quick Response (QR) Code is a type of bar code which can be ...
  2. Weightless Economy

    A portion of the economy which exchanges intangible services ...
  3. Days Sales Of Inventory - DSI

    The days sales of inventory value (DSI) gives investors an idea ...
  4. Carrying Cost Of Inventory

    Carrying cost of inventory, or carry cost, often refers to a ...
  5. Unified Payment Interface (UPI)

    A Unified Payment Interface is an instant payment system launched ...
  6. Accounting Information System - ...

    An accounting information system is the collection, storage and ...
Related Articles
  1. Investing

    Barclays Thinks Alibaba Can Hit $200 a Share

    If Alibaba continues to post blowout quarters, Barclays thinks the stock could hit $200.
  2. Tech

    Walmart and IBM Will Use Blockchain to Ensure Food Safety

    The major U.S. retailer is experimenting with ways of using the cryptocurrency technology to help ensure that its food products are tracked sufficiently.
  3. Investing

    Alibaba: Barclays Ups Price Target a Second Time

    Five weeks after Barclays raised its price target to $175 a share, it's upped it again to $180.
  4. Investing

    Alibaba Pushes Dual Strategy With New Stores

    Alibaba launched three new physical retail stores as it pushes its online/offline strategy.
  5. Personal Finance

    One Person + Multiple Careers = Greater Wealth

    Self-made millionaires are not one-trick ponies. You shouldn't be either.
  6. Personal Finance

    5 Financial Apps Worth Buying

    Getting your new iPhone set up? These apps will help you manage your money.
  7. Small Business

    How Amazon Fresh Works

    Amazon Fresh, a grocery delivery company that operates in parts of Seattle, Los Angeles, New York, and New Jersey, is a new service from Amazon.
  8. Tech


    Stripe wants to expand e-commerce by making it easy for companies to process online transactions.
  9. Investing

    How Honeywell Makes its Money

    Honeywell is a true conglomerate in a world of ever-greater specialization. Here's how it generates revenue.
  10. Investing

    Inventory Valuation For Investors: FIFO And LIFO

    We go over these methods of calculating this component of the balance sheet, and how the choice affects the bottom line.
  1. How to calculate the inventory turnover ratio?

    The inventory turnover ratio is a key measure for evaluating how effective a company's management is at managing inventory ... Read Answer >>
  2. What is the difference between JIT (just in time) and CMI (customer managed inventory)?

    Understand the principles behind just-in-time inventory management and customer-managed inventory. Learn the difference between ... Read Answer >>
  3. Which industries tend to have the most inventory turnover?

    Understand what inventory turnover measures and why it is good to have high inventory turnover. Learn what industries tend ... Read Answer >>
Trading Center