Beginning in 2024, Mastercard will no longer require European banks to issue credit or debit cards with a magnetic stripe. The same will happen in the U.S. in 2027, as Mastercard hopes to kill off the magnetic stripe by 2033.
Mastercard will be the first payment network to ditch the magnetic stripe, though its competitors are sure to follow suit. The company’s reason for ditching magnetic stripes is pretty simple; the technology is less secure than newer chip card and NFC systems.
First introduced in the 1960s, magnetic stripe cards are actually very low-tech. They’re simply plastic cards affixed with a piece of magnetic tape—the same kind of tape we once used to record audio and video. Cardholder information is encoded on this tape, and fraudsters can steal this information with a single swipe. (Check out this prototype magnetic stripe card—it ain’t exactly high-tech!)
Chip card microprocessors and contactless NFC payments are much more secure than magnetic stripes. They generate unique transaction codes for each purchase, so even if a bad actor manages to intercept your chip card payment, they’re stuck with a single-use transaction code that your bank can’t accept a second time.
Some people will be mad that Mastercard is ditching the magnetic stripe, but it doesn’t really matter, because around 86% of in-person transactions utilize chip cards today. For reference, the last major change to credit card payment systems came in 2008, when payment networks no longer required that credit cards be embossed for manual card imprinters or “zip-zap machines.” Given the irrelevance of manual card imprinters today, it’s safe to assume that magnetic stripe technology will one day feel like a distant memory.
Source: Mastercard via The Verge