Mastercard is making a big change to its cards in the interest of security.
The credit card company says it will do away with the magnetic stripe on all credit and debit cards. It will be the first to lose the technology, which made its debut in the 1960s.
Newly issued cards won’t be required to have the magnetic stripe starting in 2024, and by 2033, Mastercard says, the technology will be removed from all cards. That “leaves a long runway for the remaining partners who still rely on the technology to phase in chip card processing,” the company said in a statement.
That magnetic tape used to make those stripes isn’t especially secure, and most cards have chips embedded in them these days. Mastercard says 86% of face-to-face card transactions use this chip tech now. And new technologies, like biometric cards that use fingerprints to verify the cardholder’s identity, are on the rise.
“It’s time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly, and with peace of mind,” says Ajay Bhalla, president of Mastercard’s cyber & intelligence business, in a statement. “What’s best for consumers is what’s best for everyone in the ecosystem.”
Contactless payments are growing at a steady rate in the credit card industry. In the first quarter of 2021, Mastercard saw 1 billion more contactless transactions compared with the same period in 2020, and in the second quarter of 2021, 45% of all in-person checkout transactions globally were contactless.
Partner banks applauded Mastercard’s decision to phase out the magnetic strips.
“True progress also means retiring technologies that no longer meet our needs,” says Howard Hammond, executive vice president and head of consumer banking at Fifth Third Bank. “The way we shop, pay, and interact is changing, and we are meeting these evolving needs with smarter and more secure experiences.”
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