Mastercard is phasing out Magnetic Stripes on its cards starting in 2024.

Mastercard has announced it will be phasing out the magnetic stripe on its payment cards in "most markets" from 2024 as reliance on chip-based and contactless payments continues to grow.

A card with an EMV chip and contactless, but not magnetic stripe. - Mastercard

The Company has announced. It says it will be the first payments network to phase out the technology, which dates back to the 1960s.

The company said the magnetic stripe will start to disappear in newly-issued Mastercard credit and debit cards in Europe, while banks in the United States will no longer be required to issue chip cards with a magnetic stripe starting in 2027.

From 2029, no new Mastercard debit or credit cards will come with a magnetic stripe, except for prepaid cards in the US and Canada, and they’ll be gone completely by 2033.

Mastercard said the long lead time has been designed specifically to give remaining partners who still rely on the technology to phase in chip card processing.

"THE MAGNETIC STRIPE WAS INVESTED IN THE 1960S"

Magnetic stripes were a huge improvement over the flatbed imprinting machines (aka “knuckle-busters”) that cashiers used to have to use to record card details.

"It's time to fully embrace these best-in-class capabilities, which ensure consumers can pay simply, swiftly and with peace of mind," Mastercard Cyber and Intelligence business president Ajay Bhalla said. "What's best for consumers is what's best for everyone in the ecosystem."

Nowadays, 86 percent of in-person card transactions globally use EMV chips. These are typically authenticated using a PIN, but biometric fingerprint authentication is also emerging as a more secure alternative.

The magnetic stripe, according to Mastercard, was initially developed in the early 1960s by IBM to allow banks to encode card information and verify customers' cards against bad account numbers but since the arrival of chip technology there has been a decline in magnetic stripe-based payments.

Interestingly, the US hasn’t adopted EMV chips to the same extent as the rest of the world. Last year, the percentage of in-person card transactions using the technology in the country was lower at around 73 percent, despite efforts to encourage adoption. The US has historically been an outlier for a number of reasons, including its size and low fraud rates.

A survey carried out by Phoenix Consumer Monitor for Mastercard in December revealed that more than half of Americans prefer using a chip card payment at a terminal over any other payment method, with security being the driving factor, followed by contactless payments -- with a card or a digital wallet. Only 11% said they preferred to swipe, and that drops to 9% when looking at cardholders with experience using contactless payments.

In March, Mastercard partnered with Samsung Electronics to pilot a biometric card that uses a built-in fingerprint sensor to authorize in-store transactions in South Korea.

The card will be able to be used at any Mastercard in-store payment terminal, they said.

It will not require PIN or signature authorizations when transactions are made, the companies added.

The amount of contactless transactions have increased by 1 billion in the first quarter of this year compared to last year, it says. Globally 45 percent of in-person checkout transactions in the second quarter of the year were contactless.