Hello Chip Cards, Goodbye Magnetic Stripe

Mastercard released an article August 12, 2021 discussing the history and future of credit cards and that means big news for businesses. 

Chip cards or EMV are widely used, but America is still catching up. EMV is important because it makes card transactions more secure for the consumer. Each transaction is given a unique code for each purchase and it further protects you from fraudulent activity.

America is behind the rest of the world when it comes to using and accepting EMV cards. In 2018 in an effort to encourage businesses to adopt the use of EMV, they created a new “EMV Compliance Law.” This law said that all businesses need to upgrade their point-of-sale systems to accept EMV cards. If they don’t then they are responsible for all chargebacks and issues that may arise with payments. 

A chargeback is also known as a payment dispute. Chargebacks happen when a consumer contacts their card issuer and disputes a charge. The bank will then look into the dispute and if it rules in the consumers’ favor then the funds are returned to them, if not, then the funds are returned to the business. 

With the EMV Compliance Law, businesses without EMV payment processing are responsible for chargebacks. In simple terms, if a business doesn’t have the ability to read EMV cards, then they have no way to fight chargebacks. 

According to the latest Mastercard article, “the magnetic stripe will start to disappear in 2024 from Mastercard payment cards.” It also mentions that banks will not have to issue cards with magnetic stripes starting in 2027. To avoid responsibility for chargebacks, businesses can upgrade their point-of-sale systems to accept EMV cards.

For more information on this topic please visit the Mastercard article: www.mastercard.com/news/perspectives/2021/magnetic-stripe/.