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The magic behind the magnetic stripe - Plastic card

The magic behind the magnetic stripe

By 2009/10/07Membership Cards

What do you really know about the magnetic stripe on the back of your gift card, credit card and the multitude of other plastic cards in your wallet?

If you are looking to implement a gift card (or other plastic card) program with this level of functionality or broker a portion of these services, keep reading.

When the card is swiped at the register it works like magic!  But unfortunately magnetic stripes are not powered by pixie dust.

Simply put, a magnetic stripe holds a unique number that is linked to a stored value account.  The plastic card is a tangible representation and access point to the account within the system in which it lives.

A common misconception is that codes for varying dollar amounts are loaded during the manufacturing process but this is not true.  Only the account numbers, which are provided by the processor managing the stored value accounts, are encoded onto the magnetic stripe during card production.  The card manufacturer guarantees that there will be no gap in the data meaning that two cards have the same number.

The more difficult and technical portion of a gift card, loyalty card, credit card or any other plastic card program is the back end processing solution.

Visa and MasterCard are two of the largest systems as they are accepted and can be processed by the largest conglomerate of retailers and service providers.  Private label credit cards, gift cards and other privately branded plastic card programs only work within their specified system e.g. Best Buy credit cards and gift cards only work at Best Buy stores.

Other payment and points based cards such as gift and loyalty cards work similarly in that they are only valid within the specified system or the store in which they are offered.  Again, this is not a fault of the actual card, but because the store in which the card will be accepted or processed must be within a centralized accounting/processing solution.

There are three components that make up a processing solution

  1. The point of sale system
  2. The processing software (within the POS)
  3. Real time bookkeeping/stored value management

All of these services are provided and managed by a processor or financial institution that keeps track of and processes the stored value accounts.

These processors make it possible for merchants to accept credit cards such as Visa and MasterCard.  Processors can also help merchants process cards for their own unique programs such as a gift and loyalty card and the magnetic stripe for a program like this is encoded with a range of numbers that is specified by the processor (as mentioned earlier).
The care is the simplest component of the scenario; however, it is arguably the most important aspect of the program because it is the physical piece that links the customer to the plastic card program and ultimately the store/brand.

Plasticcardonline can help you design or produce a custom plastic gift card, loyalty card, credit card, promotional card, plastic key tag, membership card, medical card, frequent shopper card, insurance card, plastic promotional business card or any other plastic card that is sure to stand out from the rest.

At this time there is no solution to process a card across multiple platforms.  For example there is no gift card that can be used in multiple locations other than those powered by Visa or MasterCard in which case the card must be accepted everywhere Visa and MasterCard are excepted and, of course, are subject to all fees and limitations.

The only other exception is where multiple stores share an accounting umbrella as well as processing platform.  This is why Toys R Us gift cards may also be redeemed at Babies R Us.  Also, restaurant conglomerates commonly offer similar flexibility to the consumer.

Each state has laws that govern what retailers can and cannot do with a gift card program in terms of expiration dates and associated fees.  This is another reason for the lack of a multiplatform solution.

Getting Started

  • Once a retailer chooses a gift and loyalty package from a processor they are ready to order plastic magnetic stripe cards.
  • Some processors supply the cards as part of the processing package and contractually bind retailers and service providers from using a third party source for plastic cards.
  • This, of course, is because processors make a healthy commission on the cards that they are not willing to give up.  The answer you or your client will likely hear in this scenario from a processor is, “Only our cards are guaranteed to work in our systems.”  However, the truth is that any reputable card manufacturer will guarantee their products.

Alternately, there are a few friendly processors who will allow you to work with us and manage the card buy yourself.  Those companies include:

  • Paytronix (this company provides gift and loyalty solutions for restaurant merchants only)
  • Fifth Third Gift Card Processing (gift card solutions only)
  • Smart Transaction Systems (gift card solutions only)
  • We can recommend other vendors for your specific processing needs.  Call today to speak to one of our sales experts.

Plasticcardonline is a leading manufacturer of plastic cards, card personalization, finishing services, mailing and fulfillment and printed plastic promotions.  Our products include custom plastic gift cards, loyalty cards, private label credit cards, plastic membership and custom plastic identification cards including access cards.

Our line of promotional card printing includes plastic ID badges, promotional gift cards, recycled plastic cards, plastic key tags, corporate luggage tags, custom hotel key cards, custom key tags, custom luggage tags and more.

We offer flexible solutions with the service you expect at the speed you need.  visit www.Plasticcardonline.com to learn more.

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