Not many companies still use paper documents, for good reason. According to the Gartner Group, around 15% of all paper documents are misplaced and 7.5% are lost entirely. If you’re working in finance or dealing with critical monetary transactions, that can be a major problem.

That’s why the majority of the world has changed over to the digital methods, including tools like magnetic card readers (also known simply as credit card readers). Some businesses are even scanning their old documents with computer document scanners to get themselves completely away from physical storage.

But full page scanners aside, knowing how something like a magnetic stripe reader (or mag stripe reader) works can be important to any business. That’s why to help you get a better understanding, we’ve put together this article.

How Do Mag Stripe Readers Work: Point of Sale

Credit and debit cards are one of the most common forms of payment that you will encounter in the world today. They’re used to purchase items and services daily and they make buying and selling easier and more efficient.

On the back of these cards is something called a “magnetic stripe,” and in it contains a tremendous amount of information. It is compressed of tiny magnetic particles that are 20 millionths of an inch in length. Vital information is stored within the orientation of the particles.

Reading The Data

When the stripe is read by a magnetic stripe reader at the point of sale, it has three tracks of data taken off the card. The first and second ones are about the account of the cardholder. This can include the country, the credit card number, the full name of the purchaser, and the expiration date. The third track is whatever additional information is needed.

What Happens Once Information is Read

Once the information is read, it is sent to the bank of origin through a dedicated network connection or a modem phone connection. The computers on the other end verify the account holder, make sure there is enough money or credit, and mark it approved or declined. The computer provides the reason behind declines if they occur and sends this information back.

That is the overall process in which a magnetic stripe reader operates. If you have any questions about magnetic stripe readers or card readers in general, contact us.