Forward-looking: Credit and debit cards have evolved significantly over the years, becoming more convenient and easier to use by owners and shop clerks. At the moment, most cards still have a magnetic stripe, but that is set to change as card providers will remove it in favor of chip-based payments, with Mastercard being the first payment network to do it.
Credit and debit cards have come a long way, from shop clerks having to write the card's owner data or using flatbed imprinting machines to register the card, using credit and debit cards as a payment method became more streamlined with the addition of the magnetic stripe.
First implemented in the 1960s, the magnetic stripe was brought to us by none other than IBM. The technology would allow banks to encode information onto the card's magnetic tape, offering more security than older methods. Moreover, it marked the beginning of electronic payments and the addition of chips into the cards, providing real-time authorization for any business regardless of its size.
However, new technologies such as NFC are expected to replace the magnetic stripe altogether, with Mastercard being at the forefront of this change. Starting 2024, Mastercard will be phasing out payments through card swiping in favor of chip-based payments, but the stripe will remain until 2033, giving time for partners to adapt to the new standards.
"True progress also means retiring technologies that no longer meet our needs," says Howard Hammond, EVP and head of consumer banking at Fifth Third Bank. "The way we shop, pay and interact is changing, and we are meeting these evolving needs with smarter and more secure experiences."
The decision of removing the magnetic stripe was based on results obtained from various surveys conducted by Phoenix Consumer Monitor. In a study made in December 2020, 89% answered that they prefer making chip-based payments over swiping the card. This outcome further increases to 91% when only considering cardholders with experience using contactless payments.
Another survey held in July 2021 showed that 81% of American cardholders wouldn't mind using a card without a magnetic stripe, and 92% would increase or keep use of its card without a magnetic stripe.