The 2540 was designed by IBM's Data Processing Division in Rochester, Minnesota, and was introduced in 1965.

The 2540 attaches to a System/360 multiplexer or selector channel through an IBM 2821 Control Unit.

The 2540 normally reads and punches EBCDIC data, called data-mode 1.

On the right side of the device is the reader, consisting of an input hopper holding approximately 3100 cards, and three output stackers (right to left – R1, R2, and RP3) each holding approximately 1350 cards.

The center stacker (RP3) is shared between the reader and the punch, but is not intended to be used by both at the same time.