When was the last time you swiped a credit card? If you live in the US, most places use the chip or tap payment methods instead of swiping the magnetic strip. There are several reasons for this, but most importantly, the swipe method is the least secure of the three. Transactions that use the magnetic strip are trending down, so much so that Mastercard announced in 2021 that they’d phase out the magnetic stripe.
As with most big changes, this will take place in phases. While it felt like a long time away when Mastercard provided a timeline, we’ve reached the first important date.
Removing Magnetic Stripes
From April 1, 2024, newly issued cards across the European market will no longer require magstripes, as chip and pin cards are widely adopted. I haven’t seen any bank announce that they’ll be issuing stripeless cards but I’d imagine it’s not long before we’ll start to see them hit the market.
Banks in the United States have been given additional time to prepare for the upcoming changes in payment technology. The removal of magnetic stripes as a payment method is now scheduled to begin on April 1, 2027. Mastercard has announced that by 2029, it will no longer issue new credit or debit cards with magnetic stripes. The goal is to completely phase out magnetic stripes by the year 2033.
Why Is This Taking So Long
The reason for the delay in replacing payment machines is because it is an expensive process. Chip readers were only installed because card networks shifted the liability of magnetic stripe-related fraud. If there were any fraud at the point of sale, such as the use of a counterfeit card, the loss would be borne by whichever party was not EMV-compliant.
Chip readers are now widely available, but many payment systems still include a magnetic stripe reader as a backup option. Merchants appreciate this redundancy in case a chip card fails to work properly. If a customer’s chip card doesn’t function, the merchant could lose the transaction through no fault of their own. This is one of the reasons why payment cards still maintain the magnetic stripe.
Are Magnetic Stripe Readers Going Away?
It seems that the magnetic stripe on credit and debit cards will not be going away anytime soon. While Mastercard has announced its plans to remove the magnetic stripe by 2033, it is unclear if Visa will follow suit. Additionally, Mastercard has exempted prepaid cards in the U.S. and Canada from this change. This means that even if merchants install new EMV equipment, they will still be required by the brands to support magnetic stripes.
Final Thought
While the magnetic stripe might be disappearing from Mastercard, payment readers will continue to accept swipe payments. That’s because until the stripe is gone from every card, merchants will need the ability to take payments from cards without a chip.
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3 comments
I have on rare occasions had my chip not work or taking several tries. This happened at Walmart, maybe because some people are rough with the machines.
Last year, I used a card at a hotel in India. They had to swipe the card.
Magnetic strips are still useful.
Chip reader implementation technology has a ways to go in the U.S.. My business switched over to chip readers from swiping last year and the agonizingly slow authorization speeds, long wait times for prior transactions to process so new transactions could initiate, and general glitchiness of the chip reading system made the whole process so unpleasant that we actually switched back to swiping. These are growing pains no doubt but it’s interesting that Europe has done so much better by comparison.
I literally just had to swipe my card at a local grocery store 30 minutes ago because tap and insert chip functions don’t work well at that store or many in my area. I prefer to tap and go but I swipe several times a month at least. This will be a mistake for US users.