The encoder of  measures the rotation of a magnetic disk at the motor shaft. The Encoders use custom made 8-pole magnets and 2 hall-effect sensors to provide 2 square waves, 90 degree out of phase with a total of 16 state changes per motor revolution (8 per each encoder output)

The encoder is powered by a voltage between 3-24 V, its maximum current is 10 mA. The two outputs A and B provide a square signal with voltage between 0 and Vcc with a phase shift of approximately 90° (see oscilloscope output below). Each rising and falling edge of both encoders indicate an encoder count. The frequency of these edges indicates the rotation speed (8 square waves per each encoder output, total of 16) and  the order of the transitions indicates the direction.

The rubber hubs will press fit over most small motor and drive shafts used in low power gearboxes.

Specifications:

• Encoder Power: 3: 24V
• Current (Max):   10 ma
• Hall Effect Sensors: 2
• Magnet Poles: 8
• Resolution: 16 pulse per 360 degree rotation

Wiring

• Red:Motor power supply (according to motor rating)
• Black: Motor ground
• Green: Encoder ground
• Blue:Encoder power supply (3-24 V)
• Yellow: Encoder A output
• White: Encoder B output

Nice introduction to encoders

Simple introduction to interrupts with Arduino