The invention of the magnetic stripe in the early 1960s was a landmark moment, laying the foundation for the modern payment card. Fast forward 50 years, and payments technology has come a long way as we’ve looked to deliver smarter, more secure experiences that are also sustainable. From the introduction of the EMV chip and PIN, to mobile payments, digital wallets, and contactless, innovation has driven a new era in the way we interact and transact. But building trust in that evolving digital payments ecosystem hinges on innovating responsibly.
THE NEXT EVOLUTION OF THE CARD
The speed of payments innovation is rendering some legacy technologies redundant, with newer developments offering enhanced security and convenience. For example, biometrics will likely be a standard feature of the card of the future, with 41% of consumers planning to use biometrics for seamless and consistent authentication across card and digital devices in the next year.
True progress also means retiring technologies that no longer meet consumer, merchant, acquirer and issuer demands. In 2019, Mastercard was the first to remove the signature panel from the back of cards; now we’re working closely with merchants and financial institutions to be the first to retire the magstripe.
According to industry reports, payments made by reading a card’s EMV chip represent 86.1% of face-to-face transactions globally and this number is growing year-on-year. It is therefore the right time to begin retiring magstripe – the logical next step on our path of payments progress. However, before this can happen, retailers around the world must be set up to accept stripe-less cards and banks able to issue them. For this reason, Mastercard is working with retailers and the global ecosystem on a phased timeline for magstripe removal, as we drive forward this next evolution of the card.
FUTURE-PROOFING CONTACTLESS PAYMENTS
As the payments ecosystem continues down this path of evolution, the rise of connected devices and the Internet of Things (IoT) will create increased consumer demand, while new technologies like 5G and quantum computing will transform the capacity of payments networks. But we must ensure that this technology development never outpaces trust.
To ensure that contactless technology is future-proofed for decades to come, Mastercard has launched the industry’s first enhanced contactless (or Ecos) specifications, designed over five years with a dedicated team of experts in the field and state-of-the-art security and privacy standards.
Ecos is designed to make contactless transactions resistant to attacks from both traditional and quantum computers. It acts like an invisible shield, leveraging enhanced encryption algorithms to future-proof security. The data exchange between card or device and the merchant terminal is as fast as current technology, but 3 million times harder to break.
A MORE SUSTAINABLE FUTURE
As well as delivering greater security and convenience, the payments ecosystem needs to adapt, so we can play our role in helping combat climate change—one of the biggest challenges we face as a global society. No one organization or industry has the silver bullet solution, but everyone can—and must—contribute. Reducing first-use plastics in payment cards across the world is one way Mastercard is making a difference, propelling the evolution of the payment card into a more sustainable future.
Each year, more than 6 billion plastic payment cards are produced, many of which are made from non-biodegradable first-use plastics such as PVC (polyvinyl chloride). So, in 2018, Mastercard launched the Greener Payments Partnership, with Gemalto, Giesecke+Devrient and IDEMIA—a public commitment to improving the industry’s impact on the world by reducing first-use PVC plastic in card manufacturing.
Mastercard has continued to build on these efforts, developing the world’s first sustainable card badge, supporting consumer choice. Cards carrying the badge are verified as more sustainable by a first-of-its-kind certification program that assesses environmental claims and sets a new benchmark for the industry. This, together with the Mastercard Sustainable Materials Directory and our card recycling program in partnership with G+D, will pave the way for sustainable cards to become the default, rather than the exception, and help us collectively move towards a more circular economy.
The way we shop, pay and interact has changed and the rate of that change is rapid and unrelenting. Technology has to keep up with this demand but, as a whole, the payments industry must deliver that progress through responsible innovation. That means taking a long hard look at the technologies we use and deciding whether they are still fit for purpose. It means ensuring that the solutions we create are compatible with our fragile planet and society. But above all, it’s about ensuring that they are secure and have the trust of consumers, now and for years to come.
Ajay Bhalla is president, cyber & intelligence, at Mastercard.