Frequently Asked Questions about Rotary Encoders

In the output circuit using a transistor, the collector serves as the output terminal. When the transistor is in the ON state, it outputs below 0.5 V, but when it is in the OFF state, the signal level becomes uncertain.
To avoid this state, the collector terminal is usually pulled up externally to convert it into a voltage signal.

In the case of open collector outputs, the user needs to prepare the power supply, but there is the advantage of being able to freely set the voltage level.

Open collector output circuit

Recommended Circuit (Reference)