MAY 12, 2021
8 min read
This story has started almost a century ago, but we still feel its rhythm. We speak about the appearance of the first credit cards, and the United States is here to be proudly mentioned. It all began with issuing cards on the part of the influential oil enterprises and hotel chain, which aimed at bridging the gap between their outlets and customers. So, the initial purpose was sales. Later on, in 1958, the American Express Company designed the first universal credit card for traveling and entertainment. Simultaneously, banks joined and shared this initiative by working out the specific plans for users to be interested in monthly installments or long-term credits. Personal banking software has already revolutionized the fintech industry. What’s next? Free credit cards? What do we know for sure now?
Today we no longer think about the presence of debit and credit cards in our pockets, cardholders, or phones. We’re just using them, taking for granted what has been priorly done for this. Be it American Express credit cards or issued by other providers, we rarely consider these a novelty in the modern world. If seeking proof, the number of payment card owners reaches 163 million in the UK alone, where almost two-thirds refer to debit cards. And even the more illustrative fact is that the majority of these cards are enabled for contactless transactions. It implies that the nature of using the banking cards has been shifted from the “physical commodity” to the “invisible but functional everyday tool.” First, they’re hidden in your smartphones, and the other devices and accessories will pursue this fashion soon. Second, this type of payment is done on the go at the speed of light, with no cash included. Finally, the average online banking user’s activity is daily: transportation, shopping, food delivery, sports, education, etc.
All that in toto signifies that demand creates supply, while online banking software readily brings new solutions to our needs. So what does a future credit card look like? But will the banking cards remain in the forthcoming years? Let’s look at the current trends of fintech development to form an opinion.
Current situation with payment cards
Online transactions are gaining even more power these days, and the technologies like Apple Pay, Google Pay, Stripe, Klarna, and Amazon Pay make our life easier and cashless. This miracle has become partially possible with the help of Near Field Communications aid (NFC), which successfully combines payment function with personal data storage and protection. As a result, we’re granted the opportunity to immediately exchange the required information with the merchant’s point of sale terminal. And despite the popular antagonism, this viral banking method is safer than the traditional Europay, MasterCard, and Visa chip cards (EMV). Namely, the virtual cards are usually provided with the in-built authentication mechanism, which requires way more than the standard PIN typical of debit card usage: you can also strengthen the access to your banking system via a fingerprint touch ID, a 6-digit passcode, a chip in the device, or the strictly defined user log-in requirements. As you see, mobile banking is flourishing at the present moment, and you’re a part of that!
What’s more, the banking providers are now caring more about phone centricity as customers’ proximity to the mobile phone isn’t more than 33 inches. That’s the reason why not only most of the payment operations are automated through the apps, digital wallets, and personal online accounts, but also the ground behind all the marketing tricks. All special offers and other types of ads also call for a mobile-friendly design; otherwise, they won’t work for lots of contemporary customers. Think it over if marketing is a significant part of your brand story!
Apart from that, today’s credit and debit card owners are interested in acquiring more personal control over the management of their finances. In a way, this desire is satisfied with the ability to alter spend limits, change the PIN, block the card/account in case of ‘report a loss’ necessity, and other functions accessible at your fingertips. The card providers, in their turn, are constantly coming up with new handy features to try, based on the user behavior investigation. No wonder online banking rocks, right?
Top 3 tangible shifts in banking cards usage
Though you may argue that the list below is our nearest future, we’d rather call it a matter of the incumbent reality. Undoubtedly, these trends would continue evolving in the next decade and beyond, but we can find prominent examples that already work and drive users crazy with the solutions suggested. Have a look!
#1. Almost cashless society
Do you experience lesser and lesser need in using cash while making purchases, paying for rent, utilities, and transportation, planning your new trip, or anything else? If it rings a bell to you, be sure it’s more than your perception; it’s already a given. Fortunately, there appear more opportunities to get away with using money in its physical form as virtual money is convenient and equally economically and legally sustainable. Besides, they say that plastic will be inevitably replaced with more biodegradable and recyclable substances. In this regard, a cashless society is synonymous with eco-mindfulness.
#2. Cryptocurrency in daily banking
In 2021, cryptocurrency has been named the most lucrative investment method, so there’s only a discussion over which type to select for buying. The experts recommend choosing between Bitcoin, Bitcoin Cash, Cosmos, Dogecoin, Etherum, Compound, and Polkadot. And what deserves a separate emphasis is the transformation of crypto into the everyday payment medium. The US banks are already on the way to enact such changes to retain their users and compete with the famous bitcoin exchange platforms and payment giants. One of the latest instances is the merge of Visa and Tala, which reveals the clear incentive to give their clients easier access to cryptocurrencies. And this is only a beginning!
#3. Bots and AI assistants
They’re already at your disposal whenever you want to receive a quick answer to your question, report an error, or get any other type of urgent assistance. But can you imagine these technologies working for the payment operations? Well, it isn’t a fiction anymore! Siri, Amazon Echo, and Google Now are already in the process of making this true. Wait for a little, and you’ll come across the results of their hard work!
Which cards will work for Generation Z?
As far as the Gen Z representatives are the most tech-savvy and mobile-centered, the idea of adjusting the product to the audience’s demands is logical, isn’t it? In fact, not so much is done for this purpose, and the card issuers should definitely try harder. All new features and updates should go along with the development of phones, if it’s possible, of course. In the meantime, some companies still care! The case of Capital One and Uber cooperation isn’t new, but still impressive to be recollected here. In April 2015, they’ve announced the bonus of unprecedented generosity — 20% cashback for every ride for a year. This offer related only to the Quicksilver users, but it still couldn’t diminish its effect — promotion and long-term loyalty were guaranteed. Similar reward policies can also be found among the food delivery providers and fitness centers, whereas other businesses should consider this approach seriously.
Except for the reward and loyalty schemes, another characteristic the Gen Z users will most likely lured to is personalization. Knowing the habits of this audience, you can easily trace their zest for “you might be interested in” hints. If it works perfectly for Netflix, YouTube, and Amazon, why won’t this be effective in banking too? Customize your service to get their needs and preferences met, and you’ll certainly make a profit. What can it be? Everyday or special occasion cash back, travel offers, or a pleasant entry bonus, for instance. Use your fantasy to evoke the Gen Z interest, and you won’t be forced to spend $200 for each new client acquisition. This kind of initial investment worth it!
5 future trends to affect debit & credit cards
You probably expect us to sing our praise to the aspects of more secured credit cards, their greater convenience and accessibility, or the real-time anti-laundering check-ups. But we won’t leave you on such a surface level. Go on with reading the real changes that are to take place in the foreseeable future!
#1. RFID chips everywhere
Radio Frequency Identification chips (RFID) will modify the everyday sale and trade relations as the customers will be free to leave their home not only without a wallet but also a phone. The required tiny chips will be implanted into their other favorite devices or accessories, such as rings, bracelets, watch straps, key chains, and such. Are you looking forward to buying a cup of coffee with your jewelery? It won’t be long now!
#2. Virtual coupons
Suppose we’re moving back to the old-fashioned habit of cutting and collecting coupons? No, indeed. Virtual coupons are expected to make a splash in the next 5 years or so. Their essence is to get rid of plastic cards in your pocket, and the QR code is the solution for that. Additionally, the supporters of virtual coupons will be able to appreciate their low cost as the alternative payments channel.
#3. Even more P2P sharing
The popularity of person-to-person transactions becomes noticeable even now: you can share a dinner bill at the restaurant with a friend without calculating cash or making redundant transactions between each other. Have you tried your hand at it? Venmo and Paypal are already on the crest of this hill, and we anticipate the newbies will follow this trend too.
#4. High-quality risk management
In Bryce Galen’s opinion, CEO of Zero, future credit cards will be shaken by the AI. In terms of risk management, it means that the issuers will make a huge step towards the reevaluation of the geo-bound scoring models to the more varied data account. The latter will include such indicators as the geolocation battery level on the user’s phone while asking for the credit extension. By this, the card providers will hope to decrease fraudulent activities. Same tendency will be applied even to the blockchain services like Provenance to diminish both risks and transaction spendings.
#5. Enhanced financial planning
Payment systems are believed to go on their growth, despite governmental resistance and further disintermediation. Correspondingly, we’re expecting to see the budding companies appear in the market to step on the toes of Wealthfront and Betterment, which are now known as the AI financial planning innovators serving the needs of diverse groups of consumers. This personalized approach is naturally paid off, as the human financial assistants were blamed to limit their advice to the limited clientele circle. Serving underbanked is always a smart idea!
So, what’s a correct answer?
Are you waiting for the ready-made decision on our part? We’d like to bring you to forming a personal unbiased opinion on the question of future payment cards’ existence. However, this would be much easier done with the research implications we’ve shared with you so far. As information can be rightly considered a new currency, stay aware of the latest trends, keep your critical thinking running, and you’ll choose the healthy balance between your product profit and its value to the target audience. Better payment tools and interfaces will be in high demand, so be a shrewd observer and don’t miss your chance to give users a new fintech relief!