In the early 1960s, the wife of an IBM engineer had the brilliant idea of pecking magnetic tape on plastic cards with an iron. In order to sell more computers, IBM marketed gastric strips on plastic cards, and serial production began 50 years ago. Today stomach strips are no longer safe and at least outdated for payment cards. MasterCard is now almost completely phasing out over twelve years.
This exit is taking place gradually. Next MasterCard waives from 2024 in most countries on the compulsion to have gastric strips on his credit and debit cards. The company does not issue cards itself, but operates a payment network for “MasterCard” cards. The cards are issued by banks and similar financial institutions called issuers. They currently still have to apply the stomach strip, from 2024 this is up to them. Only in the USA will issuers have to issue chip cards with magnetic stripes up to and including 2026.
From 2029 MasterCard will not use magnetic strips on MasterCard cards worldwide. This means that there will no longer be any valid MasterCard cards with this feature in 2033 – with one exception: Cards issued in North America with prepaid credit may still have gastric stripes after 2029. MasterCard has not yet set the bathing end for these prepaid cards.
The iron method
The background is that magnetic stripe technology has started its triumphant advance in North America. According to IBM In the early 1960s, Forrest Parry wanted to attach magnetic tape to CIA ID cards in order to be able to store more data. But he puzzled over the task of permanently connecting the tape to the ID cards. His wife solved the problem by referring to her iron.
In 1971, IBM’s Information Records Division in New Jersey began series production. The offer was hugely successful and boosted sales of IBM computers. To this day there are numerous machines in North America that still read stomach strips for the payment process. Retrofitting them often does not pay off. Accordingly, MasterCard is taking the exit in the USA and Canada at a leisurely pace.
Contactless payment is the best seller
After all, the market research firm Phoenix found out in July that eight percent of American cardholders would use plastic money less often without a magnetic strip. In the fourth quarter, 86 percent of all face-to-face transactions worldwide with cards from American Express, Discover, JCB, MasterCard, UnionPay and VISA were authorized via the EMV chips in the cards, either by inserting the card or by swiping the card without contact.
However, there are clear regional differences: In Europe, the EMV chip intervenes in almost all of these transactions. In Asia, however, this only applies to 81 percent of face-to-face transactions, and in the USA it only applies to 73 percent. The contactless payment with EMV chip and NFC antenna in the credit card, introduced by VISA in 2002, caught on particularly quickly. 45 percent of all face-to-face transactions worldwide are now triggered by “tapping”.
Visa and MasterCard are using this popularity as a lever to get rid of magnetic stripes: Since October 2019, payment terminals in the USA and Canada that offer contactless payments are no longer allowed to accept magnetic stripes. In the event of problems with the EMV chip, Visa Canada has banned the use of magnetic strips since 2018. In addition, in large parts of the world credit card issuers only approve the stomach strip for domestic use. Customers who want to use the insecure method abroad must expressly request this function.
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