Who Invented the Strip on Credit Cards?


The magnetic strip that is located on the back of the credit card was invented by a Sarasota, Fla., resident named Ron Klein. Klein is an inventor who has a talent for sizing up a problem, and finding a workable solution. His talent has awarded him a patent for his invention. It is named Validity Checking System, and is patent number 3465289; this can be found by going online: www.google.com/patents.

The Initial Problem

In the 1960s, retail store cashiers were experiencing a time-consuming search for bad or invalid credit card account numbers with each purchaser who bought with a credit card. Way back then, this was a manual process of comparing the customer's credit card number with a long list of printed account numbers that had been flagged as bad accounts. Each one had to be looked up to see if it appeared on the long list that was updated (and growing) each day. During holiday season, this presented long waits for customers to check out. Complaints by shoppers as well as workers were piling up.


Klein began working for Ultronics Systems Corp. in 1964, which was later bought by GTE Financial Data Services. GTE had a large retail client who put the aforementioned problem in front of GTE for a possible solution. Klein considered that all of the bad account numbers could be stored in a memory device, and a keypad could be used so the clerk could key in the purchaser's account number. If the memory device recognized the account number, it would alert the clerk. If it did not recognize the account number, the account would be considered valid. This worked fine, but was still time-consuming.

The Ultimate Solution

Tape recorders were new to the 1960s, and gaining popularity. Klein considered that if the account number could be embedded in a strip of magnetic tape and adhered to the back of a credit card, the card could be scanned by a "reader," which would read the tape and transmit the information to the memory device to compare it with all those bad account numbers. This worked great.

Klein then took his idea to a credit card manufacturer to see if the magnetic tape could be added to the card. The manufacturers agreed that it could easily be done ...and the rest is history, as they say. This process sped up credit card shopping, but opened the door to later high-tech solutions involving credit card identification and detection of fraud. This is all due to the information that is stored in the magnetic strip.

Information Pioneer

Klein's talent for sizing up business chaos came at a time that was the beginning of the "information highway" explosion. All data and information needed a systematic way to be organized and accessed. Klein's ability to make sense out of this chaos has literally paved the way to newer high-tech solutions to more-complex challenges, which are now being resolved by computer programmers and software makers.

Still More Solutions

Ron Klein went on to organize and make sense of how to store other types of data. He is the inventor of the computerized data system for real estate known as Multiple Listing Services (MLS). He also designed the bond quote and Trade Information System for the New York Stock Exchange. Today, he is an inspiring and popular speaker for business groups and conventions.

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