Magnetic stripe, EMV and contactless cards comparison

6 May 2017

Everyone, for sure, dreamed the wallet would be small, comfortable, and represent a sort of “magic table-cloth”: it takes a little space, but can always please the owner with a “rich inner world”. There is such a miracle. The wallet is about a millimeter thick and half-palm-sized. Capable of storing both forty cents, and seventy thousand dollars. Money would not drop out of it. This wallet is electronic, or more precisely, it is a plastic card, an evolutionary way of development of which gives “carte blanche” to ordinary consumers when choosing banking services.

Magnetic stripe cards: long life and impending death

Magnetic stripe cards popularity is natural. Having a low cost, they are widely used in banking and retail, remaining the most common type of cards. However, they cannot be considered an ideal payment instrument, since magnetic cards feature a number of drawbacks.

Know your card by sight!

Insufficient durability of data storage. Magnetic tape is subject to mechanical and other influences.

Unable to update the data. It does not allow to store information on the status of the cardholder’s account.

Always on-line. Necessity to contact the bank in real time to conduct a transaction.

Weak fraud protection. The magnetic strip is easily copied by inexpensive devices (skimmers), and easy to fake.


In the next few years, the magnetic stripe cards will finally fall off the edge of the earth. However, their legacy continues to exist. The initial information standards, and the way the data is physically located on the magnetic stripe, have experienced all changes in terms of data carriers. And just like most people have completely forgotten the origin of QWERTY layout on the keyboard, everybody and their brother will clean forget that the magnetic stripe set all this in motion.

A “new dawn”: EMV standard

It goes without saying that magnetic stripe cards are gradually replaced by new generation products –smart cards. EMV (Europay + MasterCard + VISA) is the international standard for bank card transactions with an integrated microprocessor (a chip), which has a number of key strengths over its “younger brother”, classic plastic with a magnetic stripe.

Smart “plastic”

Security. The transaction is confirmed every time by a new, specially generated code.

Reliability. PIN-code entering remains the main principle of the cardholder’s identification.

More storage space. The chip memory considerably exceeds the magnetic stripe’s one, and allows to store, in addition to identifying information, transaction parameters, as well as install various applications for participation in loyalty and bonus programs.

E-signature protection. Provides the most accurate identification of the card owner when conducting banking operations.

Offline transactions. No need to wait for online authorization.

Durability. Unlike the magnetic stripe, the chip card is more resistant to mechanical damage, which increases the lifespan.

All rolled into one

But let’s get back to the prose of existence: a plastic card with a chip is rarely seen. The EMV standard allows for a similar symbiosis. A magnetic stripe is useful in case there are no ATMs nearby accepting smart cards. However, all the opportunity areas inherent in magnetic stripe cards are out again.

EMV “holes”. Completely safe?

We shall have to take the shine off smart “plastic” a bit, because there is still a place for phishing – data theft from a bank card (both chip and magnetic) via the Internet, and, unfortunately, no one is immune to it. When paying in the online store, the card owner enters the identification data (card number, CVV2 / CVC2 code, etc.). If this data comes to the hands of malefactors, then no chip will protect your money.

High growth rates of the economy open up new horizons for the smart cards usage. Microprocessor cards really have undeniable competitive advantages over their magnetic counterparts. Undoubtedly, the future is behind chip cards, and magnetic “plastic” will soon become as rare as a cuckoo clock.

Contact? No contact!

Modern technologies are increasingly penetrating into everyday life. Innovations don’t let up on ordinary consumers. At times, it seems they have magical properties, bordering on fantasy. One of such daring, innovative technologies is contactless cards, operated based on Radio Frequency Identification (RFID) technology powered by Near Field Communication (NFC), for establishing a connection. Just hold the contactless card against the payment terminal – and “Voila!”, the purchase is quickly paid.

Contactless cards

Contactless cards: reason for popularity

Instant payment. Record speed of transaction.

Ease of use. No need to enter a PIN-code, and insert the card into the terminal.

Relative safety. Inability to read the data off, since customers have not to get their card out of the wallet;

Not to prying eyes. No need to transfer the card to an unauthorized person, seller.

Convenience. NFC technology can be connected to mobile applications, therefore there is no need to carry the card about. It is enough to hold the smartphone over the terminal to make payment.

A fly in the ointment

Lack of infrastructure. Not all outlets have “up-to-date” equipment.

Single transaction limit. Exceeding the limit amount creates an inconvenience by entering the PIN-code.

Unpleasant nuance. Scammers are finding ways to “pick pocket”, creating a homemade RFID-reader to steal the card data.

Thus, the contactless payments system is certainly convenient and progressive. And very soon ordinary consumers will imperceptibly come to it, just as the radio has come to pass in the subway or as the television has become digital. Meanwhile, to feel on the cutting edge of progress, just buy a new smartphone with NFC function. And this is all you need to pay elegantly when making a purchase.

The technological evolution of plastic cards has come a long way, creating increasingly convenient and modern payment methods. What seemed impossible yesterday, unbelievable, firmly comes into common use today. And who knows, what technological novelty will drive on contactless payments heels. The time will tell….

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