How does the magnetic stripe on the back of your credit card work?

The magnetic stripe on the back of your credit card stores your card information and is used to authorise your transactions at the checkout.

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Most Australian credit cards are equipped with a magnetic stripe on the back. It contains encrypted data of your card and account to process your transaction when you swipe your card at the checkout. Most credit cards also come with a chip, which is used to authorise a transaction when you insert your card at the checkout.

Use this guide to understand how magnetic stripes work, the information it contains and how to protect your card from being skimmed.

How does the magnetic stripe work?

Your magnetic stripe is made up of small iron-based magnetic particles contained in a plastic film. Each stripe can hold around 200 bytes of encrypted account information and can be read by bank ATMs and card terminals.

When you swipe your card through the card reader, the acquirer that processes the payment (such as Visa, Mastercard or American Express) checks the transaction information on the magstripe to validate the transaction. It checks data including the merchant ID, card number, expiration date and credit limit.

What data is stored on the magnetic stripe?

The magnetic stripe contains three tracks that store different encrypted data and serve separate purposes. The third track is rarely used, but you can see the information that's usually found on the first and second tracks below.

On the first track, the 'A format' holds the proprietary information of the credit card company and the 'B format' holds the following data:

  1. One character that is the start sentinel
  2. One alpha only character that is format code "B"
  3. One character that is a separator.
  4. Three characters that are the country code
  5. Two to 26 characters that are your name
  6. One character that is a separator
  7. Four or one character that is the expiration date or separator
  8. Up to 79 characters that contain discretionary information
  9. One character that is an end sentinel
  10. One character LRC (Longitudinal redundancy check)

The second track was developed by the banking industry and contains:

  1. One character that is a start sentinel
  2. Up to 19 characters that are the primary account number
  3. One character that is a separator
  4. Three characters that are the country code
  5. One or four characters that are the expiration date or separators
  6. Up to 40 characters that contain discretionary information
  7. Once character LRC

Why do credit cards with a chip still have a magnetic stripe?

Most credit cards issued in Australia come with chip technology as well as a magnetic stripe. Your card still has a magnetic stripe in case you're shopping somewhere that does not have a chip-enabled terminal or if your chip is malfunctioning.

While your chip creates a unique code for every transaction, your magnetic stripe presents the same data to credit card readers every time the card is used. This means that scammers can use the information from your magnetic stripe if your card is skimmed. If you're worried about your credit card being skimmed, you can use an RFID wallet to protect your card and make sure the ATM or EFTPOS reader hasn't been tampered with before using it. You can see Finder's guide to protecting your card from fraud and skimmers for more information.

Magnetic stripes are designed to protect your card information and ensure secure transactions. If you're having trouble making payments when you swipe your card, it could be because your mag stripe is dirty or scratched. If your card has been exposed to magnets, your magstripe could've been erased. You can contact your financial institution for a replacement card if you suspect that your magstripe has been damaged.

Images: Shutterstock

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