Chargebacks Glossary

Your go-to resource for understanding payment, fraud, and banking terminology with clear definitions from Acquirer to Zero Liability

Magnetic Stripe Reader

A magnetic stripe reader is a hardware device designed to read the data encoded into the magnetic stripe (magstripe) of certain cards or badges. The magstripe is most commonly associated with the use of credit and debit cards, where it is used to store the account details of the cardholder. This information can be captured by the card reader and verified with the issuer in real time.

Magstripes are composed of magnetic particles, each one similar to a bar magnet, only on a micro scale. Magnetic stripe readers are equipped with a solenoid that generates strong magnetic fields. When the magnetic stripe card is moved over this surface, the device can electronically “read” the information.

At one time the most common method of storing information on credit cards, the magstripe has largely been replaced by EMV “chip” technology. Most merchants have had to upgrade their magnetic stripe readers to also read embedded microchips.

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