Magnetic Stripe Readers Moving Into Other Markets

The average consumer has at least two plastic cards with data-encoded magnetic stripes. People use debit and credit cards to pay for purchases at retail stores. People use loyalty cards with magnetic stripes to take advantage of sale prices at grocery stores. People use membership cards with magnetic stripes to gain access to country clubs or health clubs. Magnetic stripe cards stripes are used in many types of applications. This is good news for VARs looking for increased sales opportunities, say two vendors of magnetic stripe card readers.

To learn more, Business Systems Magazine interviewed Ivy Chang, vice president and general manager of Uniform Industrial Corporation (Fremont, CA) and Jackson Lum, president of Logic Controls (New Hyde Park, NY).

Third Track Drives New Applications
A magnetic stripe is the black "line" found on the back of debit and credit cards. This black magnetic stripe contains "tracks" of encoded information. Magnetic stripe cards can contain one, two, or three "tracks" of information. The first two tracks typically contain standard information used in transaction processing, such as a person's name and account number. However, a third track has been introduced in recent years that contains more personal, demographic information, such as a card user's zip code. Retailers find this information valuable in tracking where their customers live.

The third track has been instrumental in expanding the types of magnetic card applications, says Lum. Driver's licenses issued in many states, for example, include a magnetic stripe with a third track. The license, when swiped through a reader, verifies a license holder's name and birth date.

Most magnetic stripe readers being manufactured today read two tracks of information. Therefore, retailers with older magnetic stripe readers may need to replace or upgrade them to read this third track, says Lum. In addition, new readers are designed to last longer and cut down on card wear and tear. According to Lum, a magnetic stripe reader should last for 300,000 passes (number of times a card is swiped through a reader). Chang adds that the cost of triple track readers has decreased by 50% in the last four years, making it a more affordable option for VARs to sell.

High Coercivity Card Increases Security
According to Chang, magnetic cards are being made using magnetic material (high coercivity) that is more difficult to duplicate or erase. "The advantages of these 'Hi C' cards are increased security and extended card life," says Chang. The cards are less likely to be damaged during normal use, she says. Damage includes accidental erasure from exposure to other magnetic materials, including other magnetic stripe cards. VISA is expected to issue Hi C cards to its card holders beginning in 1998. Magnetic stripe readers read both Hi C and Low C cards, says Chang. Therefore, she says, VARs don't have to upgrade magnetic stripe readers to accommodate this change.

A New Breed Of Magnetic Stripe Readers
As for the future, Chang says new "hybrid" readers have been developed that read magnetic stripe and other types of cards, such as smart cards. At this time, magnetic stripe cards will remain the popular choice for financial transactions due to their low cost. Chang predicts that magnetic stripe cards will be used "side by side" with other cards in applications for the foreseeable future.