The Free On-line Dictionary of Computing (30 December 2018):

Chadless keypunch

    A card punch which cut little U-shapes in
   punched cards, rather than punching out a circle or
   rectangle.  The U's made a hole when folded back.

   One of the Jargon File's correspondents believed that the
   term "chad" derived from the Chadless keypunch.  Obviously,
   if the Chadless keypunch didn't make them, then the stuff that
   other keypunches made had to be "chad".  The assertion that
   the keypunch was named after its inventor is not supported by
   any record in US or UK patents or surname references.

   (2000-11-22)