Swipe cards are appropriately named – merchants activate them by swiping it through a credit card terminal or PC. The card owner also swipes each time it is used at the point of purchase. If the swipe card is used to buy goods or service, it acts as a debit card, automatically taking the purchase amount and deducting it from the balance. For loyalty programs, the card is swiped prior to the transaction to get points for recent purchases.

Swipe cards can be programmed for different uses across various industries. Businesses distribute them to employees to gain entry into the building. Universities provide multifunctional ID cards for students that allow them to swipe it for concessions, class and grade information, and tuition balances. And there aren’t too many supermarkets or drug stores that don’t use swipe cards to reward customer loyalty and track purchase activity.

The power of swipe cards is contained in the magnetic strip – or magstripe – on the back of the card. The magstripe contains encrypted information that can only be read when the merchant activates it for a purchase. When you swipe the card, the information is transferred to the vendor’s tracking program that maintains the information for your gift card system.

Even though the magstripe takes up just a small surface area of swipe cards, it is the most crucial part of the card. So it’s necessary to keep it clean and protected. The magstripe should be free of debris and smudges, and protected from creases or bends, so card readers can easily view your account information. You also need to steer clear of magnets that could erase the card data.