How are data stored on magnetic stripe? Bank Cards|Hotel Key Cards

You must have seen a magnetic black coloured stripe on the back of a hotel key card or a bank card. But, do you know that some data are stored in these stripes and how data is written on these magnetic stripes? 

The concept is similar to that which was used in audio cassettes or in videotapes where these stripes were divided into many sections and such stripe is made up of a material whose magnetic properties can be changed.

The magnetic stripe on the back of a badge is composed of iron-based magnetic particles encased in plastic-like tape. Each magnetic particle in the stripe is a tiny bar magnet about 20-millionths of an inch long. When all the bar magnets are polarized in the same direction, the magnetic stripe is blank. Information is written on the stripe by magnetizing the tiny bars in either a north or south pole direction with a special electromagnetic writer which is basically a solenoid, called an encoder. The writing process, called flux reversal, causes a change in the magnetic field that can be detected by the magnetic stripe reader. Since there can be two different flux reversals, N-N or S-S, there can be two different information states, much like the binary system used by computers. The magnetic stripe reader reads the information by detecting the changes in the magnetic field caused by the flux reversals on the badge's magnetic stripe.

And, when these stripes are swept through the magstripe reader, the information encoded in the magnetic stripe gets decoded and the card is identified.

Now, the question arises why data stored on ATM cards are retained for a long time but those on key cards not? The reason is that the materials used have different grades and are used for different purposes by changing the coercivity of the material.

But, the drawback is that these cards can be replicated that's why nowadays such cards include a chip on the front.