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How A Mobile Credit Card Reader Works

You own a small construction company. You and your crew travel to the construction site and re-model kitchens or bathrooms. After the work is finished, you have to get paid. You have a small attachment to your smart phone that lets you swipe credit cards. You slide the card through, have the customer sign the screen with his finger and you’ve been paid. Credit card processing moves money from the customer’s account to your merchant account in a split second. Very convenient. Very secure. You’re using a mobile credit card reader to gather the information on the magnetic stripe on the credit card and send it to the credit card company or bank.

The stripe is composed of magnetic oxide tape laminated in plastic. The tape contains three tracks of encoded information. The card reader usually reads either track one or track two, but not both. Track three isn’t used. Track one has a higher bit density than track two and is the only track with alphabetic text. It contains the name of the card holder, his credit card number, the expiration date of the card and any personal identification number information or card verification value. The second track contains a restatement of the credit card number and the expiration date.

IBM developed the magnetic stripe in 1971 as a identification device for the Central Intelligence Agency. Engineers first tried to glue magnetic tape to the plastic card but stopped because they couldn’t find an appropriate glue. One engineer told his wife about the problem. She suggested using a heat source like a clothes iron. It worked. To manufacture the cards, the engineers at IBM had to convert the IBM 360 computer from scientific/business applications which involved data storage and computations to a process control computer which would monitor the process of creating and imprinting the magnetic stripes.

Mobile card readers carry out the same processes as fixed card readers. The user swipes his credit card across the surface of the card reader which separates the information on the magnetic stripe into discrete pieces of information. The magnetic parts of the stripe are arranged like trees in a forest. Vertical stripes across the stripe alternate with blank spaces. Each vertical stripe carries a set piece of information. Any businessman who wants to stay solvent has to be able to collect money from customers and put it in a merchant account at his bank. The ability to handle credit card processing in a quick, efficient manner makes it easy for the customer and effective for the business owner.

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