After close to six decades, the iconic magnetic stripe is set to disappear from our payment cards, perhaps for good. The first-ever magnetic stripe credit cards were issued in 1969, becoming an international standard in the ensuing years. However, current security concerns mean that they may not be around for much longer.
Having been around for decades, magnetic stripe (or magstripe) technology is well-understood, with criminals having figured out how to clone magstripe credit cards long ago. Indeed, magstripe technology has been on the chopping block for some time but the sheer abundance of card swipe terminals and supporting technologies have made transitioning a challenge. However, with the increasing adoption of EMV chips and tapped NFC (near field communication) cards, major finance technology stakeholders are conceding that it’s time for a change.
Mastercard, the world’s second-biggest card payment tech provider, recently made waves by no longer requiring magnetic stripes in cards beginning in 2024, aiming to eliminate them entirely by 2033. Its major competitor Visa, meanwhile, has not revealed its plans for magstripe tech but it’s clear that a growing number of its cards are being issued without them, particularly in markets outside the US.
What Should Philippine Cardholders Know?
In the Philippines, the most secure credit card is probably not going to have the iconic magstripe. More and more new credit cards are being issued without a magnetic stripe as EMV and NFC technologies continue to gain ground. Let’s look at the current security outlook for magstripe cards:
1. Magnetic Stripe Terminals Are Being Phased Out
With credit card companies and financial institutions moving away from magnetic stripes, fewer and fewer new terminals are being issued that can actually read them. Instead, new terminals only use EMV chip and NFC technology as these significantly reduce fraud risks through encryption. As providers like Mastercard eliminate magnetic stripes on their cards, there will be less reason to issue more swipe readers, accelerating the phaseout of the magstripe ecosystem.
2. EMV Chips Offer Superior Protection
Even back in the 1980s, it was clear that magnetic stripes were easily compromised. As a result, Europay, Mastercard, and Visa developed the EMV standard to eventually replace the technology, debuting it in 1994. Unlike magnetic stripes that only provide static data, EMV chips generate a unique cryptographic code for each transaction, complicating any attempts to clone cards.
Since the adoption of chip technology, counterfeit fraud has dropped significantly worldwide. Still, your EMV card may be compromised if it also has a magnetic stripe. Knowing all that, be sure to use the EMV chip over the magnetic stripe when making purchases.
3. Contactless Payments Provide Even More Security
Contactless NFC cards increase data security by reducing the need for physical contact and by completing transactions with encrypted, one-time-use codes. Because you don’t have to hand off your card or insert it in an unfamiliar device, the risk of interception is far lower than with older-generation cards. As a huge bonus, contactless payments are also faster and more hygienic than traditional swiping, making your payment experience even more seamless.
4. Card Skimming Is Still a Major Threat
Despite advancements in security, criminals still use skimming devices to steal card data from ATMs and point-of-sale terminals. By and large, these devices are designed to capture magnetic stripe information. This means that if your card has an active magnetic stripe, it remains vulnerable even if it also has EMV or NFC technology.
For that reason, you must remain cautious when using ATMs and card readers. Inspect these for tampering before inserting your card or simply use contactless or chip payments to reduce your potential exposure.
5. Consumer Awareness Is Key to Credit Card Security
Technology can only do so much to keep your credit cards safe. Ultimately, cardholders have to be responsible for keeping their cards and finances safe.
Constant vigilance is your best bet. Start by signing up for your card provider’s updates so you can stay ahead of any developing scams. Next, take smart habits to heart, like checking card terminals before use and not sharing your OTPs to anyone. Be sure to keep tabs on your statements and report lost cards immediately to keep your information from falling into the wrong hands.
Stay Safe, Whichever Credit Card You Choose
While the writing is on the wall for magnetic stripe cards, they’re probably going to stick around for a decade or more. If you own credit or debit cards with the technology, it’s best to be aware of the typical scams and techniques used to target them. If you do own a newer card with EMV and NFC technology, however, it’s still a good idea to practice caution and common sense.