A magnetic stripe reader, also called a magstripe reader, is a hardware device that reads the information encoded in the magnetic stripe located on the back of a plastic badge. Magnetic stripe readers can be read by a computer program through a serial port , USB connection, or keyboard wedge , and are generally categorized by the way they read a badge. For instance, insertion readers require that the badge be inserted into the reader and then pulled out. Swipe readers require that the badge pass completely through the reader.
Heartland CIO on end-to-end encryption, credit card tokenization
Steven Elefant, CIO of Princeton, NJ-based Hear...(SearchSecurity.com)
The magnetic stripe on the back of a badge is composed of iron-based magnetic particles encased in plastic-like tape. Each magnetic particle in the stripe is a tiny bar magnet about 20-millionths of an inch long. When all the bar magnets are polarized in the same direction, the magnetic stripe is blank. Information is written on the stripe by magnetizing the tiny bars in either a north or south pole direction with a special electromagnetic writer, called an encoder. The writing process, called flux reversal, causes a change in the magnetic field that can be detected by the magnetic stripe reader. Since there can be two different flux reversals, N-N or S-S, there can be two different information states, much like the binary system used by computers. The magnetic stripe reader reads the information by detecting the changes in the magnetic field caused by the flux reversals on the badge's magnetic stripe.
Dating back to the 1970s, magnetic stripe readers are widely used for access control and transaction processing.