Payment service provider Mastercard has announced that it will be phasing out the use of magnetic stripes on its credit and debit cards over the next decade, making it the first payments network to do so.

According to Mastercard, the transition is set to begin in 2024 for most markets. Regions such as Europe, where the more secure chip cards are already widely used, will be among the first to see these cards with magnetic stripes go. From there, Mastercard will gradually carry out the change according to schedule; for instance, the transition in the United States is slated to take place only in 2027 as the country’s adoption of chip payments is seen to be slower. Mastercard expects that none of its cards will have magnetic stripes by 2033.

Mastercard explained that although the magnetic stripe had been a great innovation when it was introduced back in the 1960s – allowing banks to encode card information onto the stripe – better payment options have risen to take its place today. Specifically, Mastercard’s shift away from the magnetic stripe is motivated by two things: the development of newer technologies and consumers’ changing habits for payments.

“Today’s chip cards are powered by microprocessors that are much more capable and secure, and many are also embedded with tiny antennae that enable contactless transactions. Biometric cards, which combine fingerprints with chips to verify a cardholder’s identity, offer another layer of security,” Mastercard in its blog post.

The chip cards mentioned refer to the global EMV chip standard that caught on in the 1990s, which made it possible for cardholder data to be kept in integrated circuit chips embedded into cards. This technology offered increased security and became the preferred way to pay, and is also complemented by verification methods such as PIN authentication and biometric fingerprint authentication. At present, EMV chips are used for 86% of face-to-face card transactions globally, according to Mastercard.

The payment service provider also acknowledged the rising popularity of contactless payments (via cards and smartphones) that was spurred by the onset of the Covid-19 pandemic. It said that it saw an increase of one billion contactless transactions in the first quarter of 2021, as compared to the same period in 2020. Meanwhile, 45% of all in-person checkout transactions globally were contactless in the second quarter of 2021.

(Sources: Mastercard, The Verge)

• TAGS:
• Biometric Verification
• Contactless Payments
• Credit Card Magnetic Stripes
• Debit Card Magnetic Stripes
• EMV Chips
• Mastercard
• PIN Authentication