Mastercard has announced it will be phasing out the magnetic stripe on its payment cards in "most markets" from 2024 as reliance on chip-based and contactless payments continues to grow.
The company said the magnetic stripe will start to disappear in newly-issued Mastercard credit and debit cards in Europe, while banks in the United States will no longer be required to issue chip cards with a magnetic stripe starting in 2027.
By 2029, no new Mastercard credit or debit cards will be issued with a magnetic stripe, except for prepaid cards in the US and Canada, and Mastercard expects that none of its credit or debit cards will have a magnetic stripe by 2033.
Mastercard said the long lead time has been designed specifically to give remaining partners who still rely on the technology to phase in chip card processing.
"It's time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly and with peace of mind," Mastercard Cyber and Intelligence business president Ajay Bhalla said. "What's best for consumers is what's best for everyone in the ecosystem."
The magnetic stripe, according to Mastercard, was initially developed in the early 1960s by IBM to allow banks to encode card information and verify customers' cards against bad account numbers but since the arrival of chip technology there has been a decline in magnetic stripe-based payments.
A survey carried out by Phoenix Consumer Monitor for Mastercard in December revealed that more than half of Americans prefer using a chip card payment at a terminal over any other payment method, with security being the driving factor, followed by contactless payments -- with a card or a digital wallet. Only 11% said they preferred to swipe, and that drops to 9% when looking at cardholders with experience using contactless payments.
In March, Mastercard partnered with Samsung Electronics to pilot a biometric card that uses a built-in fingerprint sensor to authorise in-store transactions in South Korea.
The card will be able to be used at any Mastercard in-store payment terminal, they said.
It will not require PIN or signature authorisations when transactions are made, the companies added.