The Magnetic Strip of Credit Cards

The Magnetic Strip of Credit Cards

Credit cards offer you a line of credit that can be used to make purchases, balance transfers and/or cash advances and requiring that you pay back the loan amount in the future. When using a credit card, you will need to make at least the minimum payment every month by the due date on the balance. I’ll show you that there’s a magnetic field on the strip.

Things you’ll need: a used credit card, clear tape, iron dust, and a piece of paper.

1. Sprinkle the iron dust onto the magnetic stripe on the credit card.
2. Tap the credit card on the table to make the iron dust spread around the magnetic stripe
3. Put a piece of tape along the magnetic stripe.
4. Pull the tape out and observe it.

The ­stripe on the back of a credit card is a magnetic stripe (that’s what you’re seeing on the tape), often called a magstripe. The magstripe is made up of tiny iron-based magnetic particles in a plastic-like film. Each particle is really a very tiny bar magnet about 20 millionths of an inch long.

Your card also has a magstripe on the back and a place for your all-important signature.
The magstripe can be “written” because the tiny bar magnets can be magnetized in either a north or south pole direction. The magstripe on the back of the card is very similar to a piece of cassette tape fastened to the back of a card. (See How Tape Recorders Work.)
Instead of motors moving the tape so it can be read, your hand provides the motion as you “swipe” a credit card through a reader or insert it in a reader at the gas station pump.
There are three basic methods for determining that your credit card will pay for what you’re charging:

• Merchants with few transactions each month do voice authentication, using a touch tone phone.
• Electronic data capture (EDC) magstripe card swipe terminals are becoming more common — so is having you swipe your own card at the checkout.
• Virtual terminal on the Internet

This is how it works: After you or the cashier swipes your credit card through a reader, the EDC software at the point of sale (POS) terminal dials a stored telephone number via a modem to call an acquirer. An acquirer is an organization that collects credit authentication requests from merchants and provides a payment guarantee to the merchant.
When the acquirer company gets the credit card authentication request, it checks the transaction for validity and the record on the magstripe for:

• Merchant ID
• Valid card number
• Expiration date
• Credit card limit
• Card usage