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The Collaborative International Dictionary
iron-on

iron-on \i"ron-on`\, a. Able to be attached (to clothing) by applying pressure and heat, as with a hand iron; -- of cloth items specially made with a glue that is softened by heat; -- used especially of patches to clothing or accessories to clothing, such as replacement pockets.

Douglas Harper's Etymology Dictionary
iron-on

1959, from the verbal phrase, from iron (v.) + on (adv.).

Wikipedia
Iron-on

Iron-on transfers are images that can be imprinted on fabric. They are frequently used to print onto T-shirts.

On one side is paper, and on the other is the image that will be transferred in reverse. After placing it on the fabric and either running over the fabric side with an iron or pressing with a heat press, the image is transferred to the fabric. Iron-on transfer paper is available for use with computer printers.

Commercial quality heat transfer paper used in a heat press will yield much better results in terms of 'hand' (how the print feels on the fabric) and durability than store bought papers or transfers applied with a home iron.

A number of inkjet, copier and laser printer toners have been developed to utilize this process. This is the process developed at BlackLightning by Walter Jeffries in the 1980s for negatively charged laser printer toners for use in black and white laser printers like those from Apple, HP, Xerox, Canon and other vendors.

The advantages of commercial heat transfer over screenprinting are that it is relatively cheap and easy to create one-off, full color designs. Also, when compared with dye sublimation techniques, heat transfers can be used on 100% cotton garments, whereas dye sublimation requires at least a 50/50 poly cotton garment.