How does encoding work on gift cards?

In our article "How Do Gift Cards REALLY Work?" we briefly talked about closed loop gift cards and how they work while using your Point of Sale (POS) System.  We have received quite a response with people wanting to know more about how encoding works.

A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles that are essentially a tiny bar magnet about 20 millionths of an inch long.

What is the difference between black and brown stripes?

There are two type of magnetic stripes; HiCo or High Coersivity and LoCo or Low Coersivity.  HiCo is black in color and has a stronger magnetic field while LoCo is brown and has a low intensity magnetic field.

HiCo LoCoComparison resized 600

Now that we have picked out the type of magnetic stripe, what goes on it?

The information will be encoded on to a track or multiple tracks depending on your software requirements. offers 3 track magnetic stripes, while most will only put information on track 1 or 2.
  • Track 1 (%) → alphanumeric – Capital letters only (up to 79 characters)
  • Track 2 (;) → numeric only (up to 40 characters)
  • Track 3 (+ or ;) → numeric only (up to 107 characters)
Your Point of Sale company will usually have a track requirement (track 1, 2 or 3) as well as a character amount and starting number. As you see in the items above, Track 1 will begin with a %.  Usually this is not listed in the starting number and is simply included as it is required for track 1 to be read by your system.  For Track 3, our machines use ; as a starting sentinel instead of + as both are able to be utilized.
After a special chemical has been added to the cards, you can see a visual of what encoded cards look like:
encoding tracks resized 600

How do I supply the information to be encoded?

  1. Receive a starting number from your Point of Sale provider (or continue from a previous card order.  We keep this information on file for our customers as a complimentary service.)
  2. Request an Excel file that contains the necessary information from your Point of Sale company.  As you can see below, a thermal number (human readable which is printed on the card) as well as the encoded number are listed in an Excel format.

    EncodingExcel resized 600  

Did you know?  The magnetic strip was invented during WWII as a way of recording audio. It wasn’t until late into the 1960’s that IBM first applied it to a plastic card for aUSgovernment security system.

Take the first step to starting your gift card program and our amazing representatives can answer any additional questions that you may have.
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