Mastercard becomes first payment network to ditch the magnetic stripe
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Mastercard will phase out the use of magnetic stripes on its debit and credit cards, after 50 years of use.
The financial services firm said that merchants were increasingly relying on chip-and-pin technology to take payments, which is making the stripes obsolete.
Starting in 2024, newly issued Mastercard credit and debit cards in Europe will not be required to have the magnetic stripe, although the requirement will not be dropped in the US until 2027 as that country has not embraced chip-and-pin as readily as the EU and other territories.
From 2029, no new Mastercard cards will include the stripe and the feature will be discontinued altogether by 2033.
The firm said it wanted to give plenty of advance warning before the change to allow its remaining partners who still rely on the technology to phase in chip-card processing.
It added that it will be the first payment network to ditch the stripe; 86 per cent of card transactions already rely on chip technology globally.
Other forms of payment are also becoming popular, including biometric cards which combine a user’s fingerprints with chips to verify identity for added security, as well as smartphone-based payment platforms such as Google Pay and Apple Pay.
In February this year, Merchant Machine predicted that the UK could become an entirely cashless society in just five years due to the rise in popularity of the new technologies.
The magnetic stripe was first introduced in the 1960s to simplify credit card accounts. In the early age of modern credit cards, clerks had to write down account information for each card-carrying customer by hand. Later, they used flatbed imprinting machines to record the card information on carbon paper packets.
The magnetic stripe, which was largely credited to IBM, allowed banks to encode card information onto magnetic tape laminated to the back, paving the way towards much of the modern payment methods in use today.
The technique was already being used for audio recordings and computer disk storage before it was brought to cards.
Today’s chip cards are powered by microprocessors that are much more capable and secure than the older technology. Many also offers added conveniences such as tiny antennae that enable contactless transactions.
Ajay Bhalla, president of Mastercard’s cyber and intelligence business, said: “It’s time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly and with peace of mind.”
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