Posted by Is the death of magnetic stripes on the ‘payment cards’? Yes. Probably, that’s because chip-based payment cards are being increasingly used and adopted in the payment card industry in recent years. And that has almost triggered a slow death of magnetic stripes on credit and debit cards. In the coming years, magnetic stripes will not exist on payment cards.
By 2024, card issuers will no longer be required to use magnetic stripes on their credit and debit cards, according to Mastercard.
Why is the death of magnetic stripes on the cards
“Based on the decline in payments powered by magnetic stripes after chip-based payments took hold, newly-issued Mastercard credit and debit cards will not be required to have a stripe starting in 2024 in most markets,” according to the US-headquartered Mastercard.
Mastercard said that by 2033, none of its credit and debit cards will have magnetic stripes. This implies that Mastercard’s partners will have to move to chip-based card processing and phase out the IBM-led magnetic stripe technology invented back in the 1960s.
IBM pioneered the magnetic stripe technology
Although IBM pioneered the magnetic stripe technology in terms of storing data on magnetic over cards. The company hadn’t filed a patent for it but was compensated, according to Jerome Svigals, IBM’s magnetic stripe project manager in the 1960s and early ‘70s.
“We decided not to patent the stripe or the stripe production technologies. We wanted everybody to use them. But IBM was compensated, just the same,” Svigals was quoted on the IBM website.
“For every buck, we spent on developing the mag stripe, we got $1500 back in computer sales. Our motive was to drive computer sales, and we did,” shared Svigals.
The backstory of how IBM championed the magnetic stripe technology
BM engineer Forrest Parry had earned credits for affixing magnetic media to a plastic card for data storage in the early 1960s. Parry wanted to club a strip of magnetic tape with a plastic-based identity card for CIA officials but was unable to do so. Hence, Perry shared this problem with his wife, while she was ironing clothes at that time.
And she responded to Perry that he could use the iron to melt the strip on the card. That’s the backstory of how IBM championed the magnetic stripe technology.
For more than 60 years, magnetic stripe technology has been serving card payments, access controls and security, airlines and other industry segments in varied ways.
Not to mention. This old technology is still in use in combination with a superior and secure chip-based technology already adopted in the banking and payments industry in the past many years.
The chip-based card payment technology, comes in both contact and contactless forms, leveraging a short-range wireless connectivity technology, popularly known as near-field communication (NFC).
Already, payment card industry leaders namely Europay, Mastercard and Visa have backed the chip-based technology by introducing the EMV chip specifications in 1996.
With Mastercard’s decision to no longer use magnetic stripes on its credit and debit cards by 2024, other payments card players and partners are likely to follow the move over the next 2 to 3 years. And that would mean the death of magnetic stripes on payment cards is near.
Welcome the death of magnetic stripes on the cards
The Nevada, US-based biometric card manufacturing company SmartMetric has welcomed the death of magnetic stripes on payment cards. According to SmartMetric, storing customer credit card information on a magnetic stripe creates another insecure touch point in the credit and debit card transaction data flow ecosystem.
Citing magnetic stripes as “highly vulnerable” and “a dinosaur legacy technology” in today’s high-tech-driven payments world, SmartMetric has backed chip-based cards as it stores the card number, expiration date and user’s name amongst other things.
Chip-based payment cards more secure
According to SmartMetric’s President and CEO, Chaya Hendrick, combining the secure chip used now on credit and debit cards with a biometric reader inside it, makes the card more secure for use in the payments industry.
“Our new biometric technology inside the card not only replaces the need for magnetic stripes. But replaces the highly vulnerable four-digit PIN that is still used today,” said Hendrick.
“Fingerprint biometrics and the secure payment chip along with the abandonment of insecure card features as the PIN and the magnetic stripe go to providing a massive hardening of the credit and debit card against the ever-menacing fraudsters,” added Hendrick.