A farewell to card swipes: Mastercard to start phasing out magnetic stripes in 2024
The practice of swiping could soon be limited to thieves and online daters as Mastercard Inc. prepares a phaseout of the magnetic stripes that enable people to swipe their credit and debit cards.
Though magnetic stripes have been a fixture of payment cards for decades, the industry has pushed requirements in recent years that have shifted more payments over to safer chip-based technology, such that 86% of face-to-face card transactions globally now take place with EMV chips, according to a Mastercard blog post. As such, the company plans to to gradually do away with magnetic stripes altogether and will no longer require them on its cards beginning in 2024 in most markets.
Europe will be in the first wave of regions impacted by the relaxed requirement, as chip technology is “already widely used” there. U.S. bank issuers will no longer have to include magnetic stripes starting in 2027, per the post.
By 2029, no new Mastercard credit and debit cards will be issued with magnetic stripes, meaning that by 2033, there will be no such Mastercards in the market with that technology.
Though swipe technology has been supplanted by chip technology, the magnetic stripe once offered crucial benefits to the card industry. In the beginning days of cards, store clerks would have to write out a cardholder’s information by hand and use flatbed imprinting machines to transfer the information to carbon paper packets, the Mastercard blog noted. Card companies would issue a monthly list of bad account numbers and merchants would have to reference their own shopper records against that list to make sure that the purchases were legitimate.
The invention of the mag stripe is largely attributed to IBM, Mastercard continued, and the technology enabled banks to encode card information onto magnetic tape on the back of cards. This spurred greater card acceptance and made it easier to quickly authorize transactions.
EMV cards offer greater improvements, however, in that they feature microprocessors that help better secure a cardholder’s information. Many have small antennae that allow for contactless transactions, which have grown more popular during the pandemic given consumer wariness about passing cards to other parties.
Mastercard saw 1 billion more contactless transactions in the first quarter than it did in the same period a year prior. During the second quarter, 45% of its in-person checkouts worldwide happened through contactless transactions.
The company also sees promise in biometric cards, which have chips as well as fingerprint sensors that cardholders can use to verify their identities. France is a “hotbed” for biometric cards, said Chris Reid, Mastercard’s executive vice of data in its cyber and intelligence group, in a recent conversation with MarketWatch. The technology could help eliminate the need for PIN codes, especially in international markets where PINs are more prevalent across both the debit and credit landscapes.