Starting in the year 2024, Mastercard (NYSE: MA) will be getting rid of the usage of magnetic stripes on its debit and credit cards. This is happening mainly because the business is shifting toward much safer methods of payment, such as chip cards and other touchless techniques.
It appears as though it will be the very first time that a payment system has disposed of this particular technology, which started in the 1960s.
"It's time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly and with peace of mind," stated Ajay Bhalla, president of Mastercard's Cyber & Intelligence business, in a press statement. "What's best for consumers is what's best for everyone in the ecosystem."
EMV chips, although in development since the 1990s, have not been actively utilized in the United States to the same degree as the remainder of the world. This past year, the number of live transactions that have used this particular method was at around 73%, in spite of attempts to endorse chip card usage.
Mastercard has revealed that, throughout the course of the pandemic, touchless methods of payment, such as smartphone use, has experienced a major surge. The number of touchless payments has gone up by around one billion in comparison with the first quarter of the past year, Mastercard reports. On a worldwide level, 45% of live transactions were touchless - particularly, in the second quarter of the year.
The main reason that magnetic stripes became popularized in the past is that they contained consumer information that was needed in order to make transactions possible. It was created in order to offer a more suitable manner of carrying about credit card transactions back from the days when computers held less proficiency than they do these days. But ever since computers became more enhanced, the creation of the chip card came about, thus making payments and transactions far more convenient for customers.
With the doing away of the usage of magnetic stripes on credit cards, customers will be forced to utilize the chip, which will enable them to receive far easier, quicker forms of transaction. It will encourage consumers to become more technologically savvy, and to develop a greater appreciation for the payment systems at hand.