Mastercard will phase out the use of magnetic stripes on its credit and debit cards over the next decade as the industry moves toward safer or more convenient options such as chips and local payments. the company has announced. It says it is the first payment network to phase out technology dating back to the 1960s.
Mastercard says the transition will begin in 2024, when the track will no longer be required for new cards in areas like Europe, where chip cards are already widely used. In the United States, where the introduction of chip charges has been slower, the transition will begin in 2027. From 2029, new Mastercard debit or credit cards will not be shipped on a magnetic stripe and will be phased out by 2033.
Magnetic stripes were a huge improvement over flatbed printing machines (also known as “knuckle-busters”) that cashiers had to use to store card information. But the 1990s saw the introduction of the global EMV chip standard, which paved the way for more secure storage of cardholder data on small, embedded chip chips. Today, 86 percent of personal card transactions uses EMV chips worldwide. These are usually verified with a PIN, however biometric fingerprint authentication is also emerging as a safer option.
Interestingly, the United States has not accepted EMV chips to the same extent as the rest of the world. Last year, the share of personal card transactions using the technology in the country was lower, at around 73 per cent, despite efforts to promote adoption. The United States has been historically different for many reasons, including its size and low rates of fraud.
Although chip cards are set to succeed magnetic stripes, Mastercard notes that contactless payments, which can be made either by card or digitally using most modern smartphones, have exploded in popularity during the pandemic. The number of related party transactions has increased by one billion in the first quarter of this year compared to last year. Globally, 45 percent of personal cash transactions in the second quarter were contactless.