It is time to part ways with the payment card magnetic strip that has been initiating payments since the 1960s. Mastercard announced that it is phasing out magnetic stripes on cards forever. Beginning in 2027, U.S. issuers will no longer have to include a magnetic stripe, and beginning in 2029, they cannot be issued with a mag stripe unless it is a prepaid debit card issued in the U.S. or Canada.
That sounds like a long timeframe, but there are still quite a lot of smaller merchants that will need to swap out their terminals to accept chip technology in preparation.
The good news is that there should be a reduction in fraud from stolen magstripe data and fallback transactions.
Here’s what Mastercard had to say in their announcement:
The magnetic stripe will start to disappear in 2024 from Mastercard payment cards in regions, such as Europe, where chip cards are already widely used. Banks in the U.S. 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 U.S. 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 U.S. 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.”
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
