Magnetic Stripe Card Overview and Examples of Credit Card Feature

What Is a Magnetic Stripe Card?

A magnetic stripe card is a type of pass that permits the user to complete electronic transactions or access a locked physical space. The "stripe" contains embedded information that identifies its user.

Types of magnetic stripe cards currently in use include driver’s licenses, credit cards, employee ID cards, hotel rooms, gift cards, and public transit cards.

However, magnetic stripe cards now are being phased out and replaced by more secure microchip technology. From the user's viewpoint, it's the difference between a "swipe" and a "dip."

Magnetic Stripe Cards Explained

The cards are usually about 2 inches by 3 inches and made of plastic or durable paper. A stripe on the back contains the data embedded in iron particles in plastic film. An electronic reader is swiped through a slot. The reader decodes the embedded data and approves (or denies) the transaction or access that is being attempted.

If the magnetic stripe becomes dirty, scratched, or demagnetized, the card may not work.

What's On a Magnetic Stripe

The magnetic stripe on a credit card contains three horizontally stacked tracks, each of which stretches across the full width of the card and occupies a portion of the magnetic stripe. Each track is capable of holding a different amount and type of data.

These tracks contain the credit card account number, name, expiration date, service code, and card verification code. Credit cards primarily or exclusively use the first two tracks. The third track sometimes contains additional information such as a country code or currency code. Other types of magnetic stripe cards use all three tracks.

How Magnetic Stripes Are Hacked

Magnetic stripe cards have been targets for fraud since their introduction. Data thieves can use devices that are capable of skimming and copying the data in the stripe. That information is used to create duplicate cards that can access the account in stores or tap into the user's online accounts.

Such potential for abuse led to the development of new ways to secure transactions and permit access.

What's Replacing Magnetic Stripes

The EMV microchip, or chip-and-PIN, technology is replacing magnetic stripe technology, especially in credit cards. (The acronym stands for Europay, Mastercard, and Visa, the companies that created the technology.)

Microchip cards use a superior system: a unique, single-use encrypted digital signature that is harder to copy. A PIN entry or signature may be required for an additional level of security.

Magnetic stripe cards have not disappeared altogether. For the time being, retailers are processing transactions with both technologies. A magnetic card is "swiped" at the side of the retailer's device, while a microchip card is "dipped" into a slot at the front of the machine.