The picture above depicts Jessica Dennis receiving the very first consolidated Merchant Mariner Credential. This was back in May of '09.
The new credential, if you haven't already seen it, is like a passport. It contains all your licenses, endorsements, qualifications, waivers, limitations, etc. Any additional endorsements will be added in the form of a sticker. Like your original license, it's good for five years.
The new credential takes the place of the previous four, seperate USCG documents: Merchant Mariner Document, Merchant Marine License, Certificate of Registry, STCW Certificate.
When I needed to renew my captain's license, which was up this year, I was advised to apply for my MMD (AB-Unl.) at the same time, even though my MMD still had four years left to go to its expiration date. Putting all your licenses together on one credential and having them set to expire at the same time saves quite a bit of money, and not just in license fees. Don't forget, each renewal requires a new physical and a new drug test (or proof of enrollment in a random drug pool).
Anyway, as I understand it, you must carry the new license with you, and also keep your paper captain's license with you, even though the latter has expired. In fact, I think the expired paper license is still suppose to be posted on your vessel.