HISTORIC “MAGNETIC STRIPE” CREDIT CARD WAS BORN 50 YEARS AGO

Most every industry/profession has early adopters and creator generations that those who follow can and should thank, without whose early and diligent work getting the ball rolling there might not have even been a “high-tech” card industry or profession to build on.

A dear friend of ours, Ken Adams, who we have known for some 40 years, was one of those creators on a team of innovative creators during his early generation work with a volunteer subcommittee of the Bankcard Division of the ABA and the development and publishing of “Technical Specifications for Machine-Readable Cards” for revolving credit use. You want some fun facts of his recollections on the matter, please read on.

As he wrote me recently to say when “Googling” about the early history of credit cards, he found references that IBM published the original standards for Mag Stripe cards. Untrue. A Committee was chaired looking into what would become the bankcard industry with Perry Hudson of Chase Manhattan Bank, with team representatives: Bert Tobin of Chase, Tom Leforge of Bank of America, Ernie Northup from Chemical Bank, Sean Millen of the Interbank Card Association (predecessor of “Master Charge” later “MasterCard”), and Sandy Isaac of State Street Bank, plus Ken Adams from ABA as staff director of the committee, among others. The working group then aligned over time with the American National Standards Institute, ANSI.

Their ANSI working group and their ABA Standards adopted as an American National standard, went to the International Standards Organization (ISO) in Stockholm with Robert Brown of Addressograph, Chuck Fisher of the Airline Transport Association, Ken Adams from the ABA, and another member of the Canadian Bankers Association. The ultimate result of this gathering over much time was the ABA Standard became the International standard as well. Around the same time, as Ken Adams reported to me, IBM did play a key role in helping with security issues, and personal identification techniques. They did not, however, develop or publish the standard. The ABA and Ken Adams had it published. All this happening in the 1971-1975 time frame. Progress in the early years could be a slow slog.

At the Stockholm meeting, the French delegation introduced using a data chip instead of a Magnetic Stripe, that would have cost at the time around $16 each, compared to the Mag Stripe version with an encoded stripe with five tracks & Mylar on the reverse of the plastic at less than a penny at scale. The Mag Stripe then became the ISO standard plastic device at the time.

“Charge” cards had been around for decades of course, i.e., Diners (paper cardboard) Card in 1950, and then the BankAmerica revolving Credit Card in 1958, becoming a Visa Card 1976; the first consumer debit card, 1966 Bank of DE. The first ATM Card, 1966, Barclays, London. A shout out to the previous generation of innovators. Today, it’s all Chip Cards!

Interestingly, although the cards and payments world today has moved on to advanced technology with Chip Cards across the globe, the legacy Magnetic 5-Track Stripe is still there on the reverse of most plastics and also available for alternative use in card readers as a backup.

What will the future hold for technological advancements? The creators and innovations of this generation will be telling you soon enough; notably in the fraud identification and control area, among other needed improvements. Ours has always been a profession of continuous advancement!

R.K. Hammer, in honor of and in respect for our life long friend, Ken Adams formerly at ABA, "The father of the Mag Stripe."