Mastercard Is Finally Ditching Magnetic Stripes—What’s Next? GA S REGULAR Menu Lifewire Tech for Humans Newsletter! Search Close GO News > Smart & Connected Life
Mastercard Is Finally Ditching Magnetic Stripes—What’s Next?
Phones are likely the future of money
By Charlie Sorrel Charlie Sorrel Senior Tech Reporter Charlie Sorrel has been writing about technology, and its effects on society and the planet, for 13 years. lifewire's editorial guidelines Updated on August 19, 2021 10:55AM EDT Fact checked by Rich Scherr Fact checked by Rich Scherr University of Maryland Baltimore County Rich Scherr is a seasoned technology and financial journalist who spent nearly two decades as the editor of Potomac and Bay Area Tech Wire. lifewire's fact checking process Tweet Share Email Tweet Share Email Smart & Connected Life Mobile Phones Internet & Security Computers & Tablets Smart Life Home Theater & Entertainment Software & Apps Social Media Streaming Gaming Key Takeaways
Magnetic stripes will be gone from Mastercard by 2033.Phone payments are safer, easier, and more private than card payments.One day, you may be able to tap your phone on an ATM to get cash. CardMapr.nl / Unsplash The magnetic stripes on credit cards are absurdly insecure, and Mastercard is finally getting rid of them. Over the next 10 years or so, Mastercard will phase out magnetic stripes in favor of more secure chips and contactless payment methods like Apple Pay and Google Pay. This will start in Europe, which is already far ahead of the US in payment tech, and magnetic stripes will be totally erased by 2033. And a good thing too. Magnetic stripes are old technology that’s easy to exploit, whereas phone payments are way more secure, more private, and easier. "Unlike magnetic stripes, which merely confirm your credit card’s number and expiration date, EMV chips create unique, encrypted codes whenever you use your card. While this doesn’t completely eliminate the risk of using credit cards, it does reduce it," Sara Rathner, credit card expert at NerdWallet told Lifewire via email. Security LOL
The magnetic stripe on the back of your credit card "is the exact same thing that cassette and 8-track tapes work on." Ruston Miles, founder and advisor of Bluefin, told Lifewire via email. "Fraudsters buy card numbers obtained from the many card breaches on the dark web and print them onto magnetic stripe cards using inexpensive cards and printing machines they buy on eBay." ...as we’ve seen with other forms of mobile payments and digital wallets, just because it’s available doesn’t necessarily mean a lot of people are doing it. Cloning a card is as simple as copying a cassette tape, yet it is still the standard in the US. But in Europe, cards are rarely swiped through a reader. Credit card terminals almost all have contactless readers, where you just wave a card or a phone over the machine. Failing that, you insert the card, and it reads the chip. Paying with something like Apple Pay is even better, and even if somebody steals your phone, they still can’t use it to pay. "With digital wallets, even the merchant can’t see your financial information. As you pay, a unique 16-digit code is applied instead of one unchanging credit card number. You also have to authenticate the purchase with a PIN or biometric information like your fingerprint or face," says NerdWallet’s Rathner. It gets better. "If your phone is lost or stolen, companies like Apple, Google, and Samsung all allow you to remotely wipe your data," Nathan Grant, senior credit industry analyst at Credit Card Insider, told Lifewire via email. Barriers
In Europe, the Apple Pay uptake was fast because most card-readers were already contactless, so iPhone payments just worked, even in countries where Apple Pay hadn’t yet been officially rolled out. In the US, the infrastructure update has been slow. Jonas Leupe / Unsplash "Change has to happen with merchants, too. You can’t use a new payment method if a store hasn’t updated their technology at the register," says Rathner. When people get a taste of Apple Pay, they want to use it everywhere. And the pandemic has only sped things up. "A lot of Americans may have started using mobile payments for hygienic reasons (because they were afraid to touch potentially germy payment terminals), and they’ll stick with them because they’re quick, convenient, and secure," Ted Rossman, an analyst at CreditCards.com, told Lifewire via email "US gas stations have just recently begun accepting mobile payments at scale. They lag about five years behind most American retailers thanks to an extension they negotiated with financial institutions." And then there’s the biggest incentive of all—money. "Visa will be encouraging merchants to adopt NFC contactless payments by offering lower interchange rates (that is, the mandatory credit card fees) for tokenized transactions," Melissa Johnson, payments analyst at MerchantMaverick, told Lifewire via email. The Future of Electronic Payments
So far, we’ve seen how mobile payments make regular credit card payments safer, easier, and more private. But what about the future? What new features could phone payments bring? ...EMV chips create unique, encrypted codes whenever you use your card. While this doesn’t completely eliminate the risk of using credit cards, it does reduce it. One is that you can easily send money back and forth between friends using Apple Pay Cash. Another may be ATM withdrawals using a phone instead of a card and a number. "Many banks already offer this capability (e.g., Chase, Bank of America and Wells Fargo)," says Rossman. "But as we’ve seen with other forms of mobile payments and digital wallets, just because it’s available doesn’t necessarily mean a lot of people are doing it." When people get used to using their phone for every payment, using a card just to withdraw cash will seem archaic. Phones really do seem to be the future of credit card payments. Was this page helpful? Thanks for letting us know! Get the Latest Tech News Delivered Every Day Subscribe Tell us why! Other Not enough details Hard to understand Submit More from Lifewire How to Fix Google Pay Not Working How to Avoid Credit Card Skimmers How to Add a Credit Card to Cash App How to Add a Credit Card to PayPal How to Add a Credit Card to Apple Wallet How to Use Fitbit Pay How to Use Samsung Pay Samsung Pay vs. Google Pay (Formerly Android Pay) How to Add Money to a Venmo Balance How to Pay With Google 8 Popular Mobile Payment Apps How to Control iPhone Safari Settings and Security How to Use Apple Pay on iPhone 13 How to Change Payment Method on Meta (Oculus) Quest and Quest 2 What Is Samsung Pay? How Does Google Pay Stack Up Against Samsung Pay and Apple Pay? Newsletter Sign Up Newsletter Sign Up Newsletter Sign Up Newsletter Sign Up Newsletter Sign Up By clicking “Accept All Cookies”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Cookies Settings Accept All Cookies