Today’s chip cards are powered by microprocessors that are much more capable and secure, and many are also embedded with tiny antennae that enable contactless transactions.
Biometric cards, which combine fingerprints with chips to verify a cardholder’s identity, offer another layer of security.
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.
Now, chip-based technology is the norm, such that 86% of face-to-face card transactions globally now take place with EMV chips.
As such, the company plans to gradually do away with magnetic stripes altogether and will no longer require them on its cards beginning in 2024 in most markets.
- New and challenger banks top customer satisfaction survey
- Fintech investment sees “incredibly strong” growth in 2021
- Scottish fintech company expand Canadian gift card programme
Europe will be the first casualty in the great swipe purge, where chip cards are already widely used. Banks in the US will no longer be required to issue chip cards with a magnetic stripe, starting in 2027.
“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. “What’s best for consumers is what’s best for everyone in the ecosystem.”
By 2029, no new Mastercard credit or debit cards will be issued with a magnetic stripe. Prepaid cards in the US and Canada are currently exempt from this change.
“The merchant community looks forward to a day when requirements to support the magnetic stripe and the burden to protect data merchants really don’t need are eliminated,” says John Drechny, CEO of the Merchant Advisory Group, which represents more than 165 US merchants.
“We applaud Mastercard for taking this next step to help to strengthen payment security and protect merchants and consumers from risk. We’d like to see others in the industry move in this direction”, he adds.
Join the conversation: Fintech Summit 2021
Now in its eighth year, the Fintech Summit is the largest annual gathering of financial technology leaders in Scotland.
Following one of the most turbulent periods in modern history, the 2021 Summit will consider the role of financial innovation in socio-economic recovery, featuring talks from a range of industry leaders.
For more details and information on how to register for the 2021 Fintech Summit, please visit: www.fintech-summit.co.uk