Magnetic Stripe Reader is a point-of-sale (POS) device used for interpreting data encoded on a magnetic stripe card.

Millions of magnetic stripe readers, magnetic stripe check readers are installed worldwide. Magnetic stripe reader is used mostly for security and financial transaction purposes. They are also used in financial institutions, retail stores, telecommunication companies, kiosks, gaming, transit, schools, sports and recreation facilities and clubs for identification and transportation purposes.

The magnetic stripe readers are available in different models and sizes. A full size magnetic stripe reader comes with built-in keyboard wedge interface which are able to read credit card information directly into a PC's draft capture program.

A magnetic stripe reader comes in various interface formats - RTTL, RS-232, USB/keyboard and keyboard wedge interfaces.

Magnetic stripe reader and cards are manufactured in accordance to ISO specifications like - ISO 7810, ISO 7811, ISO 7812, ISO 7813, and ISO 4909. These specifications define the physical properties of the card, including size, flexibility, location of the magstripe (magnetic stripe), and magnetic characteristics.

Magstripes come in two varieties: high-coercivity and low-coercivity. High-coercivity magstripes are harder to erase, and therefore are appropriate for cards that are frequently used or that need to have a long life. Low-coercivity magstripes require a lower amount of magnetic energy to record, and hence the card writers are much cheaper than machines which are capable of recording high-coercivity magstripes. A card reader can read either type of magstripe, but a high-coercivity card writer may write only high-coercivity cards, while a low-coercivity card writer may write only low-coercivity cards.

In most magnetic stripe cards, the magnetic stripe is contained in a plastic-like film. The magnetic stripe is located 0.223 inches (5.66 mm) from the edge of the card, and is 0.375 inches (9.52 mm) wide. The magnetic stripe contains three tracks, each 0.110 inches (2.79 mm) wide. Tracks one and three are typically recorded at 210 bits per inch (8.3 kbit/m), while track two typically has a recording density of 75 bits per inch (3.0 kbit/m). Each track can either contain 7-bit alphanumeric characters, or 5-bit numeric characters.

Magnetic stripe reader(s) are used in very high volumes in the mass transit sector, replacing paper based tickets with either a directly applied magnetic slurry or hot foil stripe. Slurry applied stripe cards are generally less expensive to produce but are perceived to be of lower quality. These cards typically would not comply with the standards for payment and other cards mentioned elsewhere in this article.

Due to frequent use these cards suffer from damages. That's why the digital recording on the stripe is in a very low-density format and often duplicated several times in case part of the stripe becomes damaged.

A magnetic stripe reader works by reading the magnetic tape adhered to credit cards, badges, permits, passes and tokens. The information in the magnetic tape can range from account information, credit information etc. The tape is read by the magnetic stripe reader incorporated into ATMs, identification readers and payment terminals and forwarded to the central data processing services.

An USB magnetic stripe reader can be programmed to divide, rearrange, edit, and validate data. They automatically distinguish AAMVA and CA DMV data formats. They provide exceptional functionality and value in the smallest possible package, and are able to read upto two or three tracks of information with a single swipe in either direction in an easy to use standard-length slot.