Magnetic recording on steel tape and wire was invented by
Valdemar Poulsen in Denmark around 1900 for recording audio. In the 1950s, magnetic recording of digital computer data on plastic tape coated with iron oxide was invented. In 1960,
IBM built upon the magnetic tape idea and developed a reliable way of securing magnetic stripes to
plastic cards, as part of a contract with the US government for a security system. A number of
International Organization for Standardization standards,
ISO/IEC 7810,
ISO/IEC 7811,
ISO/IEC 7812,
ISO/IEC 7813,
ISO 8583, and
ISO/IEC 4909, now define the physical properties of such cards, including size, flexibility, location of the magstripe, magnetic characteristics, and data formats. Those standards also specify characteristics for financial cards, including the allocation of card number ranges to different card issuing institutions. As technological progress emerged in the form of highly capable and always carried
smartphones,
handhelds and
smartwatches, the term "digital card" was introduced. There are several virtual card issuing companies located in different geographical regions, such as Weel in Australia and Privacy in the USA. In 2021, Mastercard announced that "by 2033, no Mastercard credit and debit cards will have magnetic stripes".
Magnetic stripe card . A
magnetic stripe card is a type of card capable of storing data by
storing it on magnetic material attached to a plastic card. A computer device can update the card's content. The magnetic stripe is read by swiping it past a
magnetic reading head. Magnetic stripe cards are commonly used in
credit cards,
identity cards, and transportation tickets. They may also contain a
radio frequency identification (RFID) tag, a
transponder device and/or a
microchip mostly used for
access control or electronic payment.
Magnetic storage Magnetic storage was known from World War II and computer data storage in the 1950s. This engineering effort resulted in IBM producing the first magnetic striped plastic credit and ID cards used by banks, insurance companies, hospitals and many others. Initial customers included banks, insurance companies and hospitals, who provided IBM with raw plastic cards preprinted with their logos, along with a list of the contact information and data which was to be encoded and embossed on the cards.
Further developments and encoding standards IBM's development work, begun in 1969, but still needed more work. Steps required to convert the magnetic striped media into an industry acceptable device included: • Creating the international standards for stripe record content, including which information, in what format, and using which defining codes. • Field testing the proposed device and standards for market acceptance. • Developing the manufacturing steps needed to mass-produce the large number of cards required. • Modifying available equipment to enable it to issue and accept stripes and the data associated with them. These steps were initially managed by
Jerome Svigals of the Advanced Systems Division of IBM,
Los Gatos, California, from 1966 to 1975. In most magnetic stripe cards, the magnetic stripe is contained in a plastic-like film. The magnetic stripe is located from the edge of the card, and is wide. The magnetic stripe contains three tracks, each wide. Tracks one and three are typically recorded at 210 bits per inch (8.27 bits per mm), while track two typically has a recording density of 75 bits per inch (2.95 bits per mm). Each track can either contain 7-bit alphanumeric characters, or 5-bit numeric characters. Track 1 standards were created by the
airlines industry (IATA). Track 2 standards were created by the
banking industry (ABA). Track 3 standards were created by the thrift-savings industry. Magstripes following these specifications can typically be read by most
point-of-sale hardware, which are simply general-purpose computers that have been programmed to perform the required tasks. Examples of cards adhering to these standards include
ATM cards,
bank cards (credit and debit cards including
Visa and
MasterCard),
gift cards,
loyalty cards,
driver's licenses,
telephone cards,
membership cards, electronic benefit transfer cards (e.g.
food stamps), and nearly any application in which monetary value or secure information is
not stored on the card itself. Many video game and amusement centers now use debit card systems based on magnetic stripe cards. Magnetic stripe cloning can be detected by the implementation of magnetic card reader heads and firmware that can read a signature of magnetic noise permanently embedded in all magnetic stripes during the card production process. This signature can be used in conjunction with common two-factor authentication schemes utilized in ATM, debit/retail point-of-sale and prepaid card applications. Some types of cards intentionally ignore the ISO standards regarding which kind of data is recorded in each track, and use their own data sequences instead; these include hotel key cards, most subway and bus cards, and some national prepaid calling cards (such as for the country of
Cyprus) in which the balance is stored and maintained directly on the stripe and not retrieved from a remote database.
Financial cards There are up to three tracks on magnetic cards known as tracks 1, 2, and 3. Track 3 is virtually unused by the major worldwide networks, and often is not even physically present on the card by virtue of a narrower magnetic stripe. Point-of-sale card readers almost always read track 1, or track 2, and sometimes both, in case one track is unreadable. The minimum cardholder account information needed to complete a transaction is present on both tracks. Track 1 has a higher bit density (210 bits per inch vs. 75), is the only track that may contain alphabetic text, and hence is the only track that contains the cardholder's name. Track 1 is written with code known as
DEC SIXBIT plus odd
parity. The information on track 1 on financial cards is contained in several formats:
A, which is reserved for proprietary use of the card issuer,
B, which is described below,
C-M, which are reserved for use by ANSI Subcommittee X3B10 and
N-Z, which are available for use by individual card issuers:
Track 1 Format B: •
Start sentinel — one character (generally '%') •
Format code="B" — one character (alpha only) •
Primary account number (PAN) — up to 19 characters. Usually, but not always, matches the
credit card number printed on the front of the card. •
Field Separator — one character (generally '^') •
Name — 2 to 26 characters, surnames separated by space if necessary, Surname separator: / •
Field Separator — one character (generally '^') •
Expiration date — four characters in the form YYMM. •
Service code — three characters •
Discretionary data — may include Pin Verification Key Indicator (PVKI, 1 character), PIN Verification Value (PVV, 4 characters),
Card Verification Value or Card Verification Code (CVV or CVC, 3 characters) •
End sentinel — one character (generally '?') •
Longitudinal redundancy check (
LRC) — it is one character and a validity character calculated from other data on the track.
Track 2 This format was developed by the banking industry (ABA). This track is written with a 5-bit scheme (4 data bits + 1 parity), which allows for sixteen possible characters, which are the numbers 0–9, plus the six characters : ; ? . (It may seem odd that these particular punctuation symbols were selected, but by using them the set of sixteen characters matches the
ASCII range 0x30 through 0x3f.) The data format is as follows: •
Start sentinel — one character (generally ';') •
Primary account number (PAN) — up to 19 characters. Usually, but not always, matches the
credit card number printed on the front of the card. •
Separator — one character (generally '=') •
Expiration date — four characters in the form YYMM. •
Service code — three digits. The first digit specifies the interchange rules, the second specifies authorization processing and the third specifies the range of services •
Discretionary data — as in track one •
End sentinel — one character (generally '?') •
Longitudinal redundancy check (
LRC) — it is one character and a validity character calculated from other data on the track. Most reader devices do not make the LRC available for display, but use it to verify the input internally to the device.
Service code values common in financial cards: First digit :1: International interchange OK :2: International interchange, use
IC (chip) where feasible :5: National interchange only except under bilateral agreement :6: National interchange only except under bilateral agreement, use IC (chip) where feasible :7: No interchange except under bilateral agreement (closed loop) :9: Test Second digit :0: Normal :2: Contact issuer via online means :4: Contact issuer via online means except under bilateral agreement Third digit :0: No restrictions, PIN required :1: No restrictions :2: Goods and services only (no cash) :3: ATM only, PIN required :4: Cash only :5: Goods and services only (no cash), PIN required :6: No restrictions, use PIN where feasible :7: Goods and services only (no cash), use PIN where feasible ==United States and Canada driver's licenses==