What Is Credit Card Swiping and How Does It Work?
Understand the foundational technology of credit card swiping. Learn how this traditional payment method works, from data reading to transaction initiation.
Credit card swiping represents a traditional method for initiating payment transactions. It enables the transfer of cardholder information to merchants for purchase authorization. This foundational method involved a physical interaction between a payment card and a dedicated reading device, facilitating the exchange of necessary data.
Components of Credit Card Swiping
A credit card swipe transaction involves two elements: the credit card itself and a magnetic stripe reader. The credit card features a dark magnetic stripe, or “magstripe,” typically located on the back. This stripe is composed of tiny iron-based magnetic particles embedded within a plastic-like film, allowing for the encoding of information.
The magnetic stripe reader, often integrated into a point-of-sale terminal, is the device designed to interact with this stripe. When a card is swiped through the reader’s slot, the reader’s internal components physically interact with the magnetic stripe. This interaction allows the device to detect the magnetic fluctuations encoded on the stripe.
Data on the Magnetic Stripe
The magnetic stripe on a credit card contains information organized into tracks. Most credit cards utilize two or three tracks, with Track 1 and Track 2 being the most commonly used for financial transactions. Track 1 typically includes the cardholder’s name, the primary account number (PAN), and the card’s expiration date.
Track 2 primarily stores numeric data. This track generally contains the primary account number, the card’s expiration date, and a three-digit service code. The service code provides information about the card’s usage parameters and acceptance requirements, such as whether it’s enabled for international interchange or requires a PIN. The data stored on these tracks is static and unencrypted, meaning the information remains consistent with each swipe.
The Swiping Transaction Mechanics
Initiating a credit card swipe transaction begins with the physical act of moving the card’s magnetic stripe through the reader’s slot. The card must be oriented correctly, with the magnetic stripe facing the reader, and swiped at a consistent speed. As the magnetic stripe passes over the reader’s head, the varying magnetic fields on the stripe induce a voltage in the reader’s coils.
This induced voltage is then amplified and converted into digital data by the card reader. The reader decodes this data, extracting the cardholder’s information, such as the primary account number and expiration date, from the magnetic tracks. Immediately after reading the data, the card reader transmits this retrieved card information to the payment processor. This transmission serves as the initial step in requesting authorization for the transaction, sending the card details and the transaction amount to the processor to begin the approval process.