Credit Card Swipe Machines Fact Sheet

Modern business relies on the almost instantaneous transfer of money. The rise of the computer created the ability to send money around the world in a few nanoseconds. The modern consumer, pressed for time and perhaps short on cash, usually has at least one credit card. What follows is a brief description of how credit card swiping machines speed transactions through the financial pipeline.

History of

IBM developed the concept of using magnetic strips to store customer information in 1970. A credit card swiping machine to read the data was developed at the same time.

Significance

The strip's data is stored in the form of positive and negative charges, which a credit card swiping machine converts into 0's and 1's, the binary basis on which computers operate. The computer then converts this binary code into numeric values.

Function

Credit card swiping machines read the information on the card's magnetic strip. The data is transmitted via telephone line to the cardholder's issuing bank to determine whether there is sufficient money to back up the transaction.

Benefits

Credit card swiping machines ensure safe and reliable sales transactions for the merchant. They also offer customers the convenience of not carrying cash or writing checks.

Risks

If the issuing bank's or merchant's computer system is hacked, cardholders' personal information is stolen and can be used for fraudulent purposes. "Skimming" this information at the point of sale is becoming more common, too.

Features

The median price for an all-in-one credit card swiping machine and printer is about $350. These combination units save space and provide a printed customer copy immediately.

Types

Traditional credit card swiping machines rely on landline phone modems. Wireless phone technology now makes it possible for seasonal and mobile businesses to use credit card swiping machines.

Resources

• History of the credit card
• Swiping risks
• Shopping for a machine