Mastercard outlines plan to remove magnetic stripes from its cards
By The MixDex Team Article may include affiliate links
Credit card giant Mastercard has announced a plan to eliminate magnetic stripes from cards with its logo on them.
Magnetic stripes were added to credit cards starting in the 1960s as an alternative way for merchants to access the data on them in order to process payments more efficiently.
Even for years after the introduction of the magnetic technology, many merchants still used devices called imprinters and special paper that would, when used together, transfer the raised lettering and numbers on the face of cards to a slip that would be submitted for processing later.
Mastercard’s move makes it the first payment network to announce a plan to start removing stripes — though the earliest changes will be seen is 2024, when stripes become optional on cards carrying the Mastercard logo.
Mastercard will stop issuing cards with stripes in 2029 and then, by 2033, the stripe will be gone completely. The move affects Mastercard branded credit and debit cards.
Part of the reason behind the 10 year timeline is to give merchants of all sizes a chance to upgrade to chip or contactless technology payment terminals, a move that is already well under way.
EMV chips have risen in popularity as a way to more securely transfer data between a card and terminal, which became more of a priority for retailers and the payment issue after a series of high profile data leaks that revealed card numbers weren’t being adequately protected during in person checkouts.
New regulations also transfer more liability onto merchants who opt out of using chips, even as gas stations’ deadline for EMV readiness just passed in April 2021.
Likewise, NFC and other contactless payment technologies have risen in popularity as more devices, especially Apple ones, become compatible, and consumers continue to look for ways to avoid coming in contact with high touch surfaces during the pandemic.
One of the biggest weaknesses of the magnetic stripe is that the data is easy to read using gear that’s readily available. Devices called “skimmers” had popped up everywhere from restaurants to gas pumps to ATMs, designed to read and store sensitive data from each card swiped through, often to be used to attempt fraudulent transactions or identity theft later.
NFC and contactless options do a better job of encrypting data, even in cases when a card is inserted into a terminal. Many contactless payment methods also use a unique credit card number that, in many cases, not even the cardholder knows. These numbers can be changed periodically if they become compromised.
Many card issuers have also stopped printing card numbers on physical cards to avoid exposing those numbers to prying eyes.
Mastercard’s move also represents the fact that more and more transactions take place online, where the magnetic stripe is all but useless.
Ironically, the payment company Stripe, which powers millions of credit card transactions a day, draws its name at least partially from the magnetic stripes that became synonymous with credit cards — and will likely start disappearing from the world over the next decade or so.