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The magnetic stripe appeared in the early 1960s and has been an integral feature of debit and credit cards since then. But Mastercard think the magnetic stripe is reaching its expiration date and they decided to become the first payment network to phase it out.
The first modern universal payment card debuted in 1950. It was a cardboard "charge" card and could be used at participating merchants. The card featured the cardholder's name, address, and account number. And the first plastic credit card was issued in 1959. By that time, many merchants and banks started issuing their own cards. The cashier had to take an imprint of the card and send the paper copy for reconciling and billing - a slow process where human errors could occur.
In the 1960s, coded card information was recorded into the magnetic stripe that was laminated to the back of the card. At the same time, the first chip card made its debut in France. There was one major problem, though - different chip cards didn't work with every terminal.
The global EMV chip technology standard was introduced in the late 1990s and chip cards started gaining popularity. Chip cards are more secure, and today more than half of Americans prefer using a chip card over any other payment method.
Recent studies for Mastercard by the Phoenix Consumer Monitor show that 81% of Americans would be more comfortable with a card that does not have the magnetic stripe, and 92% would use their card more often if the magnetic stripe was no longer on the card.
As a result, Mastercard decided to start issuing cards without the magnetic stripe in 2024 in regions, such as Europe. The U.S. banks will no longer be required to issue chip cards with a magnetic stripe starting 2027. And by 2029, no new Mastercard credit or debit cards will be issued with a magnetic stripe.
Cards equipped with chips will become the new standard. The chip is more secure and harder to duplicate than magnetic stripes.
The pandemic has led to a boom in contactless payments. Consumers started to accept this payment method more actively as it limits the items they touch, which means increased safety. So, the swipe will soon go away and the technologies we no longer use or that no longer meet our needs will retire.
