Mastercard is phasing out the use of magnetic stripes on its credit and debit cards over the next decade, as the industry moves towards more secure or convenient alternatives like chips and contactless payments, the company has announced. It says it will be the first payments network to phase out the technology, which dates back to the 1960s.
Mastercard says the transition will start in 2024, when the stripe will no longer be required on new cards in regions like Europe where chip cards are already widely used. In the US, where the adoption of chip payments has been slower, the transition will start in 2027. From 2029, no new Mastercard debit or credit cards will come with a magnetic stripe, and they’ll be gone completely by 2033.
Magnetic stripes were a huge improvement over the flatbed imprinting machines (aka “knuckle-busters”) that cashiers used to have to use to record card details. But in the 1990s the global EMV chip standard was introduced, which paved the way for cardholder details to be held more securely on small integrated circuit chips embedded into cards. Nowadays, 86 percent of in-person card transactions globally use EMV chips. These are typically authenticated using a PIN, but biometric fingerprint authentication is also emerging as a more secure alternative.
Interestingly, the US hasn’t adopted EMV chips to the same extent as the rest of the world. Last year, the percentage of in-person card transactions using the technology in the country was lower at around 73 percent, despite efforts to encourage adoption. The US has historically been an outlier for a number of reasons, including its size and low fraud rates.
Although chip cards are being positioned as the successor to magnetic stripes, Mastercard notes that contactless payments, which can be made by either a card or digitally using most modern smartphones, have exploded in popularity during the pandemic. The amount of contactless transactions have increased by 1 billion in the first quarter of this year compared to last year, it says. Globally 45 percent of in-person checkout transactions in the second quarter of the year were contactless.