Earlier this year Mastercard announced it plans to eliminate the payment card magstripe by 2033, beginning to phase it out starting in 2024. The credit card giant pointed to the decline in the magstripe’s use in consumer transactions in recent years. But what does this mean for the market?
Magstripes, while once considered simple and convenient to use, are rife with security vulnerabilities. This little black stripe on the back of the card is loaded with valuable information – such as account number, name, expiration date, service code, and card verification code. While the stripe hides this information from the naked eye, point-of-sale machines can see it, and anything these machines can see is easy to replicate.
This security vulnerability was exactly why EMV chip cards were created. Chips assign a unique code to every transaction, so a cardholder’s information is much more secure during a transaction. Yet, with the move to the (contact) chip, cardholders found the experience of using one mediocre at best (i.e. clunky and slow). This paved the way for contactless tap-and-go cards.
While contactless cards are an easy and convenient way to pay, right now they are best suited for low-value transactions that don’t require a PIN. That’s where biometric sensors on the card could come into play. With the added security features of a biometric sensor, tap-and-go transactions could be used no matter the dollar value of the transaction – ultimately providing an elevated and seamless cardholder experience.
Once the cardholder experiences the ease and high level of security from a biometric sensor enabled card, contactless payment card adoption will rise – increasing the use of these cards as a whole, and doing so on higher-value transactions. And, the benefit to card issuers? Higher revenues with less risk and heightened convenience. Not only that, but also with the magstripe gone, card issuers can take advantage of more real estate on the back of the card for design, branding, or even co-branding.
To learn how Entrust financial issuance solutions can help, visit https://www.entrust.com/solutions/industries/financial.