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Magnetic recording on steel tape and wire was invented in Denmark around 1900 for recording audio.

In the 1950s, magnetic recording of digital computer data on plastic tape coated with iron oxide was invented.

In 1960, IBM used the magnetic tape idea to develop a reliable way of securing magnetic stripes to plastic cards, under a contract with the US government for a security system.

A number of International Organization for Standardization standards, ISO/IEC 7810, ISO/IEC 7811, ISO/IEC 7812, ISO/IEC 7813, ISO 8583, and ISO/IEC 4909, now define the physical properties of the card, including size, flexibility, location of the magstripe, magnetic characteristics, and data formats.

In 1971, after the IBM IRD engineers completed the development and building phase of the project they began in 1969, they released the equipment to the IRD manufacturing group in Dayton N. to begin producing the plastic magnetic striped credit and ID cards.

This was necessary in order to meet the close tolerances required to reliably encode and read the data on the Magnetic Stripe Cards by magnetic write/read heads. Robert Evans, Bernard Silver, Art Hamburgen, Heard Baumeister and Bill Crouse.

The magnetic stripe was encoded with a single track of data utilizing the IBM Delta Distance C Optical Bar Code format. The IBM group in Raleigh was competing with RCA, Litton-Zellweger and other companies who were working with the National Retail Merchants Association NRMA to develop a standard optical bar code to be used in the retail industry.

They also supplied the data information which was to be encoded and embossed on the cards.

This data was supplied to IRD on large 0.5 inch wide, 10.5 inch diameter IBM Magnetic Tape Reels which was the standard for computers at that time.

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A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of tiny iron-based magnetic particles on a band of magnetic material on the card.