Is the Magnetic Stripe Going Away?

With all of the media coverage revolving around credit card security, PCI compliance, and EMV (chip and PIN) standards, it’s easy to get confused about what’s happening with traditional magnetic stripe credit cards. We at Card Concepts Inc. (CCI) are regularly asked, “Will Visa and MasterCard issue EMV-only cards that won’t be compatible with my CCI system?” EMV standards were adopted in 1995, and 18 years later, only 45% of cards outside of the US are issued with a chip. (Source: EMVCo Worldwide EMV Deployment and Adoption as of Q4 2012 excluding United States)

Major retailers with huge investments in their point-of-sale (POS) systems will not be easily moved to a new POS system. Major issuers will need to replace their entire card-base with chip-enabled cards and that process is estimated to take between 3 to 5 years. Recent documentation from Visa also confirms that magnetic stripe cards are here indefinitely:

• Visa recommends implementing chip capable terminals that support contact chip, contactless chip, and magnetic stripe capabilities.  (Source: Visa Chip Advisory #20, Updated July 11, 2012: Visa Recommended Practices for EMV Chip Implementation in the U.S. page 3)

• Visa specifically requires magnetic stripe as the underlying card-reading format – and that it be supported on all cards.   (Source: Visa Chip Advisory #20, Updated July 11, 2012: Visa Recommended Practices for EMV Chip Implementation in the U.S. page 7)

• Visa also has no current plan to eliminate magnetic stripes. Until global acceptance of the chip card has been reached, Visa says the magnetic stripe will remain on the back of the card.

• In fact, Visa’s rules require EMV accepting devices to also support magnetic stripe.  (Source: Visa International Operating Regulations (Public version), 15 April 2013, page 421, reference ID#: 150413-010410-0004832)  Visa estimates that mag stripes will be on credit and debit cards for a minimum of 10 years and more likely over 20 years.

Additionally, according to the Smart Card Alliance and Visa, currently all EMV cards have a magnetic stripe. A quote from an infographic called “What is an EMV Chip Card” by Visa, reads “Remember: The chip card still has a magnetic stripe, just in case you need to use it with a traditional terminal.”

Slow adoption of EMV in the United States can also be attributed to the US’s ability to rely on our always-available high speed communications infrastructure for transaction authorization. This system allows merchants to perform online authorizations which provide numerous fraud prevention measures that stop suspect requests for fictitious or non-available payments in offline processing, an infrastructure that other countries are also dependent upon.

Concluding Takeaways: Magnetic stripes on cards, EMV Chips, and CCI systems

Will all current and future EMV smart cards work with CCI equipment, including FasCard and LaundryCard digital card readers?

Yes. While it’s true that EMV technology is quickly becoming more widespread, all EMV chip cards that are in use in the United States must also have a magnetic stripe mechanism for use in payment terminals, which means that all EMV smart cards work with CCI equipment.