Gift cards, along with many other cards used for purchases and identification (like credit cards and security pass cards) use a magnetic stripe (magstripe) to work. A magstripe is made up of thousands of tiny iron based particles that act like bar magnets. These particles are magnetized to face either the north or south pole in order to store information. When you swipe your card, a magnetic reader finds your information and verifies such things as the card's expiration date and amount.
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