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| MasterCard has phased out magnetic stripes |
MasterCard has announced that it will phase out the use of magnetic strips in its credit and debit cards over the next decade as the industry adopts safer and more convenient alternatives such as chips and contactless payments.
The company said it would be the first payment network to phase out 1960s technology.
Mastercard has announced that the transition will begin in 2024, when the new card will no longer need to be scratched in regions where smart cards are widely used, such as Europe.
The adoption of chip payments has been slow in the US, and the transition will begin in 2027.
By 2029, business or credit cards will no longer have magnetic stripes, and they will be gone completely by 2033.
The magnetic stripes are a huge improvement over the flatbed printers that cashiers use to record card details.
At the dawn of modern credit cards, each cardholder's account information had to be entered manually. Later, a lithography machine was used to record map information on carbon paper packages.
The credit card company sends out a list of bad accounts each month, and the merchant has to compare the customer's credit card to the list.
Ribbon access changed all of that. Attributed to IBM, this innovation allows banks to encrypt card information with a magnetic tape coated on the back.
However, the introduction of the global EMV chip standard in the 1990s paved the way for more secure storage of cardholder data via the micro-ICC chip built into the card.
Currently, 86% of personal card transactions worldwide use EMV chips. They usually use a PIN for authentication. But biometric authentication is also becoming a safer alternative.
MasterCard removes the magnetic strip
The United States has not embraced EMC chips like the rest of the world. Last year, the proportion of personal card transactions using this technology in the country was low at around 73%. Despite efforts to encourage adoption.
The United States has come a long way to do this in the past for a number of reasons, including its size and low fraud rate.
Despite smart cards being used as a successor to magnetic stripes, MasterCard has found that contactless payments with cards or using most modern smartphones have emerged during the pandemic.
Compared to last year, the volume of contactless transactions increased by 1 billion in the first quarter of this year.
Globally, 45% of in-person payment transactions in the second quarter were contactless.