Mastercard is introducing a new policy allowing transgender individuals to use their preferred names on credit and debit cards in an effort to combat discrimination at the cash register.

That means that the name on the credit card owned by a transgender person could be different than that found on their birth certificate or driver's license.

The company announced its new 'True Name' card initiative during a New York human rights panel discussion commemorating Pride Month on Monday.

The goal of the program is to make it easier for trans individuals to use payment cards without the requirement or hassle of getting their names legally changed.

Mastercard's new 'True Name' initiative allows transgender people to use their chosen names on credit and debit cards in an effort to combat discrimination at the cash register went into effect on Monday

Mastercard's new True Name card initiative was announced during a New York human rights panel discussion in conjunction with Pride Month on Monday

The credit card company said the goal of the program is to let trans individuals' true names to appear on cards without the requirement of a legal name change

Mastercard says the new program will 'ease a major pain point for the transgender and non-binary community.'

As it stands, three states - Tennessee, Kansas and Ohio - legally bar a transgender person from changing the sex listed on their birth certificate, according to Out Leadership, a LGBT rights organization that focuses on advocacy at the corporate level.

This can create confusion when a person uses one name to reflect their identity, but may have a different name legally.

'We are allies of the LGBTQIA+ community, which means if we see a need or if this community is not being served in the most inclusive way, we want to be a force for change to help address and alleviate unnecessary pain points,' Randall Tucker, Chief Diversity and Inclusion Officer for Mastercard said in a press release.

'This translates not only for our Mastercard employee community, but for our cardholders and the communities in which we operate more broadly. Our vision is that every card should be for everyone.'

Mastercard says the new program will 'ease a major pain point for the transgender and non-binary community'

The NYC Commission on Human Rights and Mastercard unveil a new 'acceptance' street sign during a WorldPride 2019 event on June 17 in New York City

A 2015 study showed that 32 per cent of transgender people who had to show an ID with a name or gender that did not match their presentation experienced harassment, were denied services or were attacked.

This is one of many reasons transgender individuals often forego the cost of official name and gender changes, which have led to discrimination while using their credit and debit cards and other non-cash payment methods.

'When we were alerted to this, we realized we could do something about it,' said Raj Seshadri, president of US issuers for Mastercard told the Associated Press.

A transgender person will no longer have to wait to get a legal name change, make changes to their birth certificate or other legal maneuvers, Seshadri said.

A trans person receives a 'True Name' Mastercard in the company's new promotional video. A 2015 study found 32 percent of trans people that had to show an ID with a name or gender that did not match their presentation experienced harassment

The change of name on a card will not create any security issues, she said, since Mastercard uses other security metrics to determine whether a purchase is legitimate or not.

'You can choose your name on your credit card, your debit card and your prepaid card, which is amazing,' Tucker told CNBC Make It. 'It first starts with their name, that's who they are, that's their identity.'

It is up to the banks that issue the cards to actually implement the change and on Monday, Mastercard called on those banks to do so.