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  Introduction to Magnetic Stripe & Other Card Technologies.

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When we use the term "card technologies", what do we mean? The easy answer is - any technology that can be placed on a card. What is a card? Typically we think of our credit or bank card but there are other sizes and materials used for different applications. The card can be made of plastic (polyester, pvc, or some other material) or paper, card, or even some amalgamation of materials. The common point is that the card is used to provide "access" to something and it includes some form of ADC/ID (automatic data collection and identification) technology.

There are currently three main technologies we think of when we mention card technologies. These are magnetic stripe, smart cards, and optical cards. Other technologies can be put on cards as well (such as bar codes, touch memory, etc.). Often the card will have printing on it which may involve technologies such as Dye Diffusion Thermal Transfer (D2T2) direct to card printing.

I will cover optical cards and smart cards briefly here and then explain further why magnetic stripe is still a viable solution for many applications of card technology.

Optical Cards

Optical memory cards use a technology similar to the one used for music CDs or CD ROMs. A panel of the "gold colored" laser sensitive material is laminated in the card and is used to store the information.


The optical card can currently store between 4 and 6.6 MB of data which gives the ability to store graphical images such as photographs, logos, fingerprints, x-rays, etc.. The data is encoded in a linear x-y format and ISO/IEC 11693 and 11694 standards cover the details.

The biggest users of optical technology today are: Medical/Healthcare; Prepaid Debit Cards; Cargo Manifests; Admission Pass Season Tickets; Auto Maintenance records; and Retail Purchase Cards.

 Smart Cards

Smart cards are credit card-sized plastic cards that contain relatively large amounts of information in an imbedded micro-chip. Smart cards differ from magnetic stripe cards in two ways: the amount of information that can be stored is much greater, and some smart cards can be reprogrammed to add, delete or rearrange data.

High Tech Aid offers Resources in AIDC technologies such as RFID and barcode as well as NFC and Internet of ThingsThere are several terms used to identify cards with integrated circuits embedded in them. The terms "chip card," "integrated circuit card", and "smart card" really all refer to the same thing.

There are two types of smart card. The first is really a "dumb" card in that it only contains memory. These cards are used to store information. Examples of this might include stored value cards where the memory stores a dollar value which the user can spend in a variety of transactions. Examples might be pay phone, retail, or vending machines. Another example of a "dumb" card is the memory that is plugged into a Personal Computer (PC Card - used to be called PCMCIA).

The second type of card is a true "smart" card where a microprocessor is embedded in the card along with memory. Now the card actually has the ability to make decisions about the data stored on the card. The card is not dependent on the unit it is plugged in to to make the application work. A smart purse or multi-use card is possible with this technology.

Smart cards are the technology of choice when fairly large databases must travel with an individual or an object. For instance, a version of smart card technology is used to record service histories for automobiles. The data travels on a small tag on the owner’s key ring. It can be reprogrammed, updated and accessed whenever the vehicle is serviced with any of that company’s dealers.

As there is a microprocessor on the card, various methods can be used to prevent access to the information on the card to provide a secure environment. This security has been touted as the main reason that smart cards will replace other card technologies.

The microprocessor type smart card comes in two flavors - the contact version and the contactless version. Both types of card have the microprocessor embedded in the card however the contactless version does not have the gold plated contacts visible on the card. The contactless card uses a technology to pass data between the card and the reader without any physical contact being made. The advantage to this contactless system is there are no contacts to wear out, no chance of an electric shock coming through the contacts and destroying the integrated circuit, and the knowledge that the components are completely embedded in the plastic with no external connections. The disadvantage to this is that there are some limitations to the use of the smart card.

Smart cards are not new, the first patent was filed in France in 1974 and the first cards were used in France in 1982. The technology was rapidly accepted in Europe because the high cost of telecommunications made on-line verification of transactions very expensive. The smart card provided the mechanism to move that verification off line, reducing the cost without sacrificing any of the security. In the United States, telecommunication costs have always been low compared to other countries. This meant that the impetus to implement smart cards has taken longer to reach the momentum needed.

The possible benefits of the acceptance of smart card technology depend on the application in use. However, the ability to move large amounts of data with little or no increase in the security of the data will lead to many new applications being created that we haven’t even begun to think about.

High Tech Aid offers Knowledge about AIDC technologies such as RFID and barcode as well as NFC and Internet of ThingsThere are many smart cards in use today throughout the world. In 1993 approximately 330 million cards were produced by the major manufacturers. Of this number only about 12% were true "smart cards", the rest were simple memory cards. This was projected to grow to approximately 580 million cards in 1995 (about 10% being "smart") and 990 million in 1996 (approx. 10% "smart"). Of the cards issued in 1993 approx. 260 million were used in phone systems; 25 million in health applications; and 23 million in banking. The rest were used in various small projects and trials.

The smart card future is extremely bright. Many changes are happening in the electronics world today that will increase the capabilities of the technology. As the state of the art in manufacturing integrated circuits improves, we get smaller ICs which run on lower voltages, giving us less power requirements and the ability to include more memory of processing power. We also need to see an increase in the speed that a card can be addressed. Currently the initialization of a smart card can take several seconds and even a single transaction may take longer than is tolerable under some circumstances.

Magnetic stripe


The first use of magnetic stripes on cards was in the early 1960’s. London Transit Authority installed a magnetic stripe system in the London Underground (UK). By the late 1960’s BART (Bay Area Rapid Transit) (USA) had installed a paper based ticket the same size as the credit cards we use today. This system used a stored value on the magnetic stripe which was read and rewritten every time the card was used.

Credit cards were first issued in 1951, but it wasn’t until the establishment of standards in 1970 that the magnetic stripe became a factor in the use of the cards. Today financial cards all follow the ISO standards to ensure read reliability world wide and along with transit cards constitute the largest users of magnetic stripe cards.


What is a magnetic stripe?







How does the magnetic stripe work?




How is information encoded on the magnetic stripe?



MFM encoding is more complicated. This type of encoding allows twice as much data to be encoded with the same number of flux reversals (edges). For more details on MFM the reader is referred to the AIM Inc. publication "Modified Frequency Modulation (MFM) for Magnetic Stripes" available on the AIM Inc. World Wide Web site.




What is coercivity?





Why would I use high coercivity?



Is higher coercivity better?



Who uses magnetic stripe cards?


Are all magnetic stripes the same?





Are there standards for magnetic stripe use?


AIM Inc.


  • Effective Magnetic Parameters of Magnetic Stripes

  • Suggested Magnetic Parameter Values for Applications

  • Magnetic Stripe Readers and Encoders - Equipment Specifications

The first two of these new standards are related to the AIM Inc. published document listed above, turning it into an ANSI standard. The third item is work that is new in the magnetic stripe world in that the goal is to create the first standards that are relevant to the equipment manufacturers. Details are available from the AIM Inc. office.

What if I want to do something different?



Magnetic stripes are not inherently secure. The problem with being easy to manufacture and encode is that it also makes it easy for the crooks to do the same. Several schemes are available for creating a secure encoding on a magnetic stripe, Watermark Magnetics, XSec, Holomagnetics, XiShield, Jitter Enhancement, ValuGard, and MagnePrint are a few. The contacts for some of these technologies are listed below. Each of these technologies exploits some aspect of the magnetic stripe, the card, and the data on the stripe to tie everything together to make counterfeiting the card in some fashion very difficult.

How do these Security Methods Work?








Stephen G. Halliday

The above paper was originally presented at,
SCAN-TECH ASIA 97, Singapore, April 24, 1997

More Magnetic Stripe Resources