Mastercard To Become First Payments Network To Phase Out Magnetic Stripe

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    Mastercard, writing in a blog post: In the early age of modern credit cards, they had to write down account information for each card-carrying customer by hand. Later, they used flatbed imprinting machines to record the card information on carbon paper packets, the sound of the swiping of the handle earning them the name, zip-zap machines. (They were also dubbed “knuckle-busters” by the unfortunate clerks who skinned their fingers on the embossing plate.) And how could clerks tell whether the customer was good for the purchase? They couldn’t. Credit card companies would circulate a list of bad account numbers each month, and the merchant would have to compare the customers’ cards against the list. The arrival of the magnetic stripe changed all that. An early 1960s innovation largely credited to IBM, the magnetic stripe allowed banks to encode card information onto magnetic tape laminated to the back. It paved the way for electronic payment terminals and chip cards, offering more security and real-time authorization while making it easier for businesses of all sizes to accept cards. That thin stripe has remained a fixture on billions of payment cards for decades, even as technology has evolved. But now the magnetic stripe is reaching its expiration date with Mastercard becoming the first payments network to phase it out. The shift away from the magnetic stripe points to both consumers changing habits for payments and the development of newer technologies. 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. Based on the decline in payments powered by magnetic stripes after chip-based payments took hold, newly-issued Mastercard credit and debit cards will not be required to have a stripe starting in 2024 in most markets. By 2033, no Mastercard credit and debit cards will have magnetic stripes, which leaves a long runway for the remaining partners who still rely on the technology to phase in chip card processing. Read more of this story at Slashdot.

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