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Take a look at your credit card. Chances are that it has a magnetic stripe (mag-stripe) on the back that is used to process your payments. Have you ever owned a credit card that didn’t have a mag-stripe? Probably not. However, after decades of this technology being used in the United States, it appears that this technology is on it’s way out. It will be replaced by chip technology.
Some foreign countries already widely use chip technology. There are several varieties in the planning or already operational. These include Europay, Mastercard and Visa (EMV) cards, chip and pin cards, and Nearfield Communication (NFC) technology, which embeds payment information in mobile phones. Now, it appears that such technology is on the verge of being adopted in the US, making payments easier for those who travel abroad.
Visa announced last week that it is seeking to end the use of mag-stripes in favor of chip technology. As of April of 2013, Visa’s US acquirer processors and sub-processor service providers must support use of this technology. According to Visa, this is all in an effort to speed up payments and increase international operability and security.
Citibank and American Airlines are also getting into the mix. They plan to issue the Citi Executive Aadvantage Card, which is geared towards big spenders with it’s $450 annual fee. The card will employ chip and pin technology.
Current plans by Visa and Citibank allow for the operation of both mag-stripe cards and cards that use chips. In other words, you will not be out of luck if a merchant still only takes mag-stripe cards. You’ll still be able to purchase using the older technology, at least in the United States. However, that technology will eventually be phased out.