In recent years, portable credit card scanning terminals from manufacturers like Lipman and VeriFone have revolutionized the way mobile businesses have conducted sales. Modern day credit card scanning machines build on encryption and communications technologies that have emerged from the information technology industry, in addition to proprietary card systems developed by banks and government agencies. Nowadays it is easy to make fast, secure credit card payments from almost anywhere, but it was not always so.
Perhaps the most significant advancement in credit cards since the first use of plastic in the 1950s was the advent of the magnetic strip. The magnetic strips on the back of credit cards were invented by IBM in 1970. By allowing credit cards to be swiped and verified using electronic credit card scanning terminals, magnetic strips increased the speed of the approval process tremendously, and reduced the amount of paperwork associated with credit card purchases. Prior to the use of magnetic strips, credit cards could only be accepted using a “knuckle-buster” credit card slider, in which an imprint of the card face is taken using carbon paper and a bit of brute force.
Magnetic stripping was not designed solely for credit cards – the same machines are used to scan driver’s licenses, gifts cards, security badges, and even the bar codes on checks. The very fist credit card scanning terminals were known as land-based card readers, which were often built into a register, or else connected to the register via a cable. These were first used by banks, government agencies, and large businesses, to conduct credit transactions. When the card was swiped, the codes were read by a system that could process approval directly from an associated bank. Later, when credit cards with magnetic strips became common for the mainstream consumer, “smart cards” with personal identification numbers became available to help prevent fraudulent charges, which were more common with older versions of credit card technology.
Continue reading on the History of Portable Credit Card Scanning Terminals Part 2.