Also called: Magnetic stripe card reader, Magnetic card reader, Magnetic card swipe reader, Mag stripe reader, MSR
What a magnetic stripe reader is
A magnetic stripe reader is the hardware that reads data encoded on the stripe on a payment card. It can be built into a payment terminal or connected as a separate device. When you swipe a card, the reader sends the card data to your point-of-sale software, which passes the transaction along for authorization.
The MSR is the device, while the magnetic stripe is the data-bearing strip on the card. A reader can also serve non-payment uses, such as reading loyalty or staff identification cards. For a card sale, the reader is one part of your payment setup, not the system that approves or settles the transaction.
An MSR reads the stripe, but the larger business decision is when to accept a swipe instead of chip or contactless.
How an MSR handles a swipe
The reader detects the magnetic information as the card moves through its slot, then transfers the captured data to your POS workflow. The payment application sends the transaction for authorization. A swipe is a card-present transaction, but the reader itself does not decide whether the issuer approves it.
An MSR can be part of a terminal that also accepts chip and contactless payments. Those are separate ways to read and transmit payment information. A magnetic-stripe transaction sends the card number itself, while an EMV chip transaction sends an encrypted code instead of the card number.
What an MSR means for cost and risk
The reader does not set interchange, network fees, or your processor's markup. Any charge for buying or renting equipment, software, or support is separate from the swipe method. Your statement does not have a universal processing-fee category called an MSR fee.
The main business concern is card-data exposure. Magstripe payments are less secure than chip payments because the card number is transmitted, and the reader and POS workflow handle sensitive card data. In the United States, the EMV liability shift means the party using the less secure technology bears counterfeit-fraud losses. As of 2026, that shift has applied to most card-present merchants since October 2015.
What you can actually change
You cannot change the card's stripe or make an MSR set your processing rate. You can control when staff accept swipes, how the POS handles card data, and whether your terminal also supports chip and contactless payments.
- Use chip or contactless payments when the card and terminal support them, and follow your acquiring environment's rules for swipe fallback.
- Keep card data out of application logs, receipts, and other records that do not need it.
- Confirm the reader and POS connection work together, then train staff on the approved swipe and fallback workflow.
- Review equipment or support charges separately from processing fees on your merchant statement.
- Check terminal options. Confirm your payment terminal accepts chip and contactless payments as well as magnetic-stripe cards.
- Limit data exposure. Check that your POS setup does not write card data into logs or records used for unrelated tasks.
- Separate equipment charges. Identify any reader, software, or support charges separately from transaction-based processing costs.
Frequently asked questions
Is an MSR the same as a magnetic stripe?
No. The magnetic stripe is the strip on the card that stores payment data. The MSR is the device that reads that data when you swipe the card and passes it to your point-of-sale workflow.
Does an MSR charge a separate processing fee?
The MSR does not set interchange, network fees, or processor markup, and there is no universal processing-fee category called an MSR fee. Your business can still have separate equipment, software, or support charges for its payment setup.
Are magnetic-stripe payments less secure than chip payments?
Yes. A magnetic-stripe payment transmits the card number itself. An EMV chip transaction sends an encrypted code instead, reducing the chance that someone can obtain card credentials for fraudulent use.