Removing the magnetic strip from a credit card is really bad advice

Ben Popken from The Consumerist shared a not-so-helpful hint from Lifehacker concerning credit cards. It pertains to the magnetic strip on the back of a credit card. From The Consumerist:

Just rub a high-strength magnet, like the kind found in a hard-drive, over the strip. It will be harder to go for a spree at the mall because the card number would have to be punched in by hand, but you will be able to make purchases online for airline tickets and such. If the primary way that you overspend is through a real-world shopping romp, this could be one way to curb your bad habit.

This is terrible advice. It’s not going to stop anyone from using a credit card. It’s only going to make whatever business accepting the credit card pay a higher fee.

When a merchant accepts a credit card for payment and the transaction is happening face-to-face, they are expected to swipe the card through a magnetic card reader. This helps to endure that the card is valid. Counterfeit credit cards using stolen card numbers rarely have an active magnetic strip. Evidently, it’s too hard for credit card thieves to encode the magnetic strip. Swiping the card also proves that the customer was present and provided their payment when the transaction took place. When a number is manually entered, that doesn’t happen.

When a card cannot be read, and the retailer decides to enter the account number manually, the card number might be stolen. The higher the risk, the higher the fees are for processing the card in the credit card industry.

When a merchant accepts a credit card over the telephone or the Internet, this risk is mitigated by collecting the billing address of the customer and the three or four-digit security code either on the front or the back of the card. Any merchant that accepts a credit card over the telephone or Internet that does not collect the billing address and the security code pays a higher fee, just like the merchant who manually enters a card number for a face-to-face transaction.

If you remove the data from a magnetic strip from your credit card because you cannot control yourself with your credit card, you are needlessly making a business pay a higher fee. That sounds like something only an asshat would do.

Don’t be an asshat.

2 thoughts on “Removing the magnetic strip from a credit card is really bad advice”

  1. I work in Retail, So If i encounter a Card that won’t swipe, Should I verify an I.D. along with the name on the Card, Or Can I go about detecting if the Card is Fake/Stolen?

    1. Yes. Check the ID. Also, when not swiping a card, you want to process AVS and the CVV2.

      AVS stands for Address Verification System. It’s a system supported by banks in the US, Canada, and the UK. It designed to give the merchant (you) another layer of protect if and when you cannot swipe the card. It checks the numbers in the street address and the postal code against the bank’s info. For example, say I live on 123 Main Street and my zip code is 90210. AVS would process 123 and then 90210. It only checks the numbers in an address. Depending on our POS system or credit card terminal, the bank will send a letter code back for AVS. If everything matches, they will send back “Y”. If only the zip code matches, it will send back “Z”, and if only the street address matches, it will send back “A”. If nothing matches, it will send back an “N”.

      CVV2 is the 3-digit security code on the back of Visa, Mastercard, and Discover cards. With American Express cards, it’s a 4-digit number on the front of the card. The only place this number exists in on the card itself. It’s not even in the magnetic strip. “M” means a match, “N” means it doesn’t match.

      It’s important to remember that the bank will approve cards even if the address and/or the security code does not match. Just because they approve the transaction does not mean the address is correct or the security code is correct.

      If your POS system or credit card terminal is not prompting for AVS and CVV2 when processing a non-swiped card, you may need to have the feature turned on.

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