The company said it's the first payments network to phase out magnetic stripes, which debuted in the 1960s and allowed banks to store information on a piece of metallic tape adhered to the card. But with newer card technologies in wide use, including contactless payments, microchips and biometric identification, the mag stripe is "reaching its expiration date," Mastercard said in a blog post last week.
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Card swipes aren't going away just yet. Newly issued Mastercards are still required to have magnetic stripes. But in 2024, they will become optional, and Mastercard will no longer issue cards with magnetic stripes by 2029. They'll be completely eliminated by 2033. The roughly decade-long timeline "leaves a long runway for the remaining partners who still rely on the technology to phase in chip card processing," the company explained.
Cards equipped with chips will become the new standard. The chip is more secure compared to a magnetic stripe because it creates a unique transaction code, which is verified by the bank. That makes them more difficult to duplicate than magnetic stripes, and it prevents hackers from stealing complete credit card information by hacking into retailers' payment systems.
Chip-based credit cards were developed in the 1960s, but it took decades to blossom in popularity because the cards didn't work with every terminal. So, a new global standard was developed for universal acceptance called EMV.
According to Mastercard, EMV is currently used for 86% of face-to-face card transactions globally. The technology lags in the United States, with just 73% of transactions using chips.
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"It's time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly and with peace of mind," said Ajay Bhalla, president of Mastercard's Cyber & Intelligence business, in a statement.
Contactless payments have boomed through the pandemic because consumers wanted to limit the items they touch, including card terminals.
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