Mastercard Is Retiring the Magnetic Stripe: What Merchants Need to Know and Do
The payment card landscape is undergoing a fundamental transformation. Mastercard has announced that newly-issued credit and debit cards will not be required to have a magnetic stripe starting in 2024 in most markets, with no Mastercard cards featuring magnetic stripes by 2033. This change represents the final phase of a decades-long migration to more secure payment technologies—and merchants must prepare now.
The Official Timeline
The magnetic stripe will start to disappear in 2024 from Mastercard payment cards in regions where chip cards are already widely used, such as Europe. Banks in the U.S. will no longer be required to issue chip cards with a magnetic stripe starting in 2027. By 2029, no new Mastercard credit or debit cards will be issued with a magnetic stripe, with prepaid cards in the U.S. and Canada currently exempt from this change.
While this timeline provides significant runway for adaptation, merchants should begin evaluating their infrastructure immediately. Card reissuance cycles typically span several years, and the transition requires coordination across multiple systems.
Impact on Merchants
Operational Considerations
The magstripe retirement fundamentally changes payment acceptance requirements. Even if merchants install new EMV equipment, they will still be required by card brands to support magnetic stripe as long as cards remain in the market, creating a transitional period where dual-capability terminals remain necessary.
However, the merchant community looks forward to a day when requirements to support the magnetic stripe and the burden to protect data merchants really don't need are eliminated. Once fully implemented, magstripe retirement will reduce the technical complexity and security obligations merchants face.
Financial Implications
Merchants continuing to process magnetic stripe transactions face increasing costs. Processors are now assessing an EMV non-acceptance fee for those who do not accept chip cards. Additionally, transaction fees for EMV payments are lower than magstripe purchases, creating a direct financial incentive to upgrade.
More significantly, the 2015 liability shift means if there was fraud at the point of sale, like a counterfeit card being used, the loss would be borne by whatever party wasn't EMV-compliant, and more often than not, that was the merchant. Non-compliant merchants bear full responsibility for counterfeit fraud losses.
Security and Regulatory Perspectives
Enhanced Security Benefits
EMV's greatest benefit has been a reduction in fraud resulting from counterfeit, lost and stolen credit cards. This increased security results from the unique, one-time code generated by the EMV cardreader for each transaction. Unlike magnetic stripes that store static account information, EMV chips generate dynamic transaction codes that cannot be reused.
Globally, EMV chips are used for 86% of face-to-face card transactions, demonstrating the technology's widespread adoption and effectiveness. This shift has proven particularly effective against physical card counterfeiting, though merchants must remain vigilant about evolving fraud vectors.
PCI DSS Compliance Requirements
A critical misconception must be addressed: The EMV chip does not meet any PCI compliance requirements, nor does it reduce PCI coverage for the vendor. Regardless of whether EMV is used or not, PCI compliance is expected. All merchants and service providers must comply with both EMV and PCI standards to fully protect customer information in card transactions.
The PCI DSS Standards take over the data security process after point-of-sale processing, with additional layers of security control at every point in the network where confidential data may be found. EMV and PCI DSS work in tandem: EMV prevents card counterfeiting, while PCI DSS protects the confidentiality of cardholder data throughout the transaction ecosystem.
Solutions for Merchants
Immediate Actions
Assess Current Infrastructure: Evaluate all payment terminals, including point-of-sale systems, fuel dispensers, parking kiosks, and ATMs. Determine which devices require EMV certification and upgrades.
Plan Equipment Upgrades: As of Q2 2022, 92% of in-person card payments were made using chip-enabled EMV cards, with contactless payments using cards and mobile or wearable devices increasingly predominating at the point of sale. Modern terminals should support both contact EMV and contactless/NFC payments.
Update Software Systems: Ensure your payment processing software supports EMV transaction flows, including proper handling of chip authentication and dynamic cryptograms.
Staff Training: Employees must understand the difference between chip insertion, contactless tap, and fallback procedures when chip reads fail.
Long-Term Strategy
The magstripe retirement creates an opportunity to modernize your entire payment acceptance infrastructure. Consider solutions that support:
Contactless Payments: In the first quarter of 2021, Mastercard saw 1 billion more contactless transactions compared to the same period in 2020, and in the second quarter of 2021, 45% of all in-person checkout transactions globally were contactless.
Tokenization: Reduces PCI scope by ensuring sensitive card data never touches your systems.
Point-to-Point Encryption (P2PE): Protects cardholder data from the moment of card entry through to the payment processor.
How QSS Can Guide Your Transition
Navigating the magstripe retirement requires technical expertise, strategic planning, and ongoing compliance management. QSS provides comprehensive support throughout this transition:
Assessment and Planning: Our team conducts thorough evaluations of your current payment infrastructure, identifying gaps and developing customized migration roadmaps aligned with the official timelines.
Technical Implementation: We manage the entire upgrade process, from terminal procurement and certification to software integration and testing, ensuring seamless compatibility across your payment ecosystem.
Compliance Assurance: QSS helps you maintain both EMV and PCI DSS compliance, navigating the complex interplay between these complementary security standards and avoiding costly penalties.
Ongoing Support: As payment technologies continue evolving, QSS provides continuous monitoring, staff training, and system optimization to keep your business ahead of security threats and regulatory requirements.
The magnetic stripe retirement is not merely a technical upgrade—it's an opportunity to fundamentally strengthen your payment security, reduce fraud liability, and position your business for the next generation of payment innovation.
Key Resources:
Mastercard Newsroom (August 2021): "Goodbye magnetic stripe" - Official announcement and timeline (mastercard.com)
Smart Payment Association (June 2023): "Phasing out Magstripe: What does the industry need to do?" - Industry collaboration framework (paymentscardsandmobile.com)
PCI Security Standards Council (October 2023): "What You Need to Know About EMV and PCI Compliance" - Technical compliance guidance (pcidssguide.com)
Merchant Advisory Group (March 2021): "Trip Down Memory Lane" - Merchant perspective on EMV transition challenges (merchantadvisorygroup.org)
Key Takeaway: The magstripe retirement is inevitable and beneficial. Merchants who act proactively will reduce fraud losses, lower processing costs, and avoid liability exposure while delivering the secure, modern payment experience customers expect.