Mastercard has announced that 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.

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.

By 2029, no new Mastercard credit or debit cards will be issued with a magnetic stripe, except for prepaid cards in the US and Canada, and Mastercard expects that none of its credit or debit cards will have a magnetic stripe 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.

"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."

Magnetic stripes were a huge improvement over the flatbed imprinting machines that cashiers used to have to use to record card details. But in the 1990s the global EMV chip standard was introduced, which paved the way for cardholder details to be held more securely on small integrated circuit chips embedded into cards. Nowadays, 86 per cent 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.

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.

Although chip cards are being positioned as the successor to magnetic stripes, Mastercard notes that contactless payments, which can be made by either a card or digitally using most modern smartphones, have exploded in popularity during the pandemic.