Mastercard mulls phasing out magnetic cards to focus on chip-based cards

During the pandemic, people all around the world have relied upon contactless forms of transactions to prevent the transmission of the Covid-19 virus from currency bills. While new forms of electronic payment such as UPI and net banking are gaining popularity, cards still remain to be one of the most used and trusted forms of payment worldwide. However, the magnetic strip through which they work is soon going to be obsolete. 

The American payments and technology company Mastercard is planning to remove the magnetic strip from all its credit and debit cards, and replace it with chip-based cards. The magnetic cards were first introduced in the 1960s when IBM came up with a way to store information on magnetic strips and allowing banks to access it in order to facilitate transactions. While the technology has been around for more than a few decades, users are now shifting towards chip-based cards.  

Chip-based cards to be the future of contactless payment 

On their official website, Mastercard says that "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." The website also says that magnetic stripe cards will begin to disappear from 2024 from cards made by Mastercard in regions like Europe, where people are already using the better and more secure chip cards. 

People around the world have used Mastercards extensively during the pandemic. On the official website, Mastercard says that in the first quarter of 2021, the company processed one billion more contactless transactions than the same period in 2020. In the second quarter of 2021, 45% of all in-person checkout transactions made globally were contactless. By the year 2029, Mastercard will not issue any new debit or credit cards with a magnetic strip. 

Advantages of the chip-based cards over magnetic strip cards

Chip-based cards house a microcomputer that can store the required information such as account number, owner's details, expiration date and others. The microcomputers on such cards are more efficient when it comes to providing access to the information and provide better safety while performing a transaction. Chip-based cards are often faster, more convenient to use as they do not require the customer to swipe and payments can be done by docking the card or even touching on a POS machine.