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Is it all over for magstripe cards?

If a cardholder from the SEPA region travels to another part of the world and cannot pay because their Chip-only card doesn’t work in the magstripe-only ATM, they won’t just brush it off and thank their bank for keeping their money safe – they will be really annoyed about the failed transaction!

May 25, 2011 by Ian Kerr — CEO, Level Four

The Seventh Progress Report published by the European Central Bank (ECB) / Eurosystem calls for all newly issued cards in the SEPA (Single Euro Payments Area) region to be issued as ‘chip only’ cards from 2012. At the moment, merchants in EMV-compliant countries are obviously set up to process transactions via Chip and PIN but they can still fall back to magstripe transactions if they wish.

Data from EMVCo indicates that in Europe, 74% of cards and 89% of terminals are EMV compliant so is the ECB proposal going to lock out the other 26% of Europeans (and the rest of the non-EMV world) from making a card payment or ATM withdrawal in the Eurozone?

Well in short, no. The ECB also states that the industry will have to be prepared to offer acceptance of magnetic stripe cards upon request, as long as there are still regions outside SEPA which have not fully migrated to EMV.

There is really little case for a proposal to limit magstripe issuance while the world is still some way from full EMV compliance. The banking industry is all too aware that consumers care about security but this is always acutely linked with convenience.

If a cardholder from the SEPA region travels to another part of the world and cannot pay because their Chip-only card doesn’t work in the magstripe-only ATM, they won’t just brush it off and thank their bank for keeping their money safe – they will be really annoyed about the failed transaction!

There are so many different permutations here, from a SEPA card in a SEPA country that is EMV compliant, one that is not, one that is but the chip is damaged, a SEPA card being used in the States, an American card being used in the SEPA region...the list is endless. 

What will make a big difference will be our American cousins finally committing to an EMV migration programme then we can move towards a non-magstripe world of higher security.

In the meantime, what this means for ATMs and PoS network managers is a need to run extensive testing to trial all of the permissible scenarios. This will significantly reduce ATM and PoS faults (and downtime) from occurring due to the vast array of possible outcomes, while we remain in this limbo status when it comes to EMV.

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