There are currently over 3 billion and credit and debit cards currently in the market. Even with the rise of e-wallets and digital money, the card industry is still expanding YoY.
There has been huge investment in POS machines and terminals, with over 50 million of them standing around the world and due to this; the financial sector does not want card payments to become obsolete.
Although plastic cards offer a secure payment method, they are vulnerable to online fraud or physical theft. There has been a recent scandal of fraudsters staying money from plastic cards via contactless technology whilst the card is still in the owner’s’ pocket.
Those who use their cards online often end up being victims of fraudulent charges to their account even though encryption and 3D secure are in place on most merchant websites. The only solution once card details have been stolen is for the bank to block the card. This leaves the owner cardless for several days whilst a replacement card is posted to them. It also means that new card details have to be sent to every merchant with whom the owner of the card has a subscription, which is a laborious and tedious task for anyone.
Card penetration is low in many markets, such as China, where many consumers have bypassed plastic cards altogether and moved straight from cash to mobile wallets. Mobile payments are fast becoming the preferred choice for P2P transactions as smartphone penetration is so high. Most large retailers accept mobile payments like ApplePay, and some even have their own branded wallets! Mobile payment apps often give users more incentives to use them, such as loyalty points and free gifts. They also allow customers to view all of their digital receipts in one place, making for easier personal accounting.
To combat competition from other mobile payment options, credit card companies are investing heavily is ewallets connected to their customers’ plastic cards. This has allowed customers to bypass the laborious task of entering their credit card information by hand for every online transaction.
Many banks are reluctant to implement digital payments, as they do not generate such high revenues that come from card transaction fees. At the same time, they risk losing customers as consumers make the shift towards non-bank financial institutions to handle their money.
One bank taking innovative steps towards non-card payments is Danske Bank. This Denmark-based bank has developed their MobilePay app, which allows customers to transfer money directly from their bank account via their smartphone. To use the app, customers simply log in with a 4 digit PIN number, and enter the mobile number of the recipient along with the cash amount. They transfer is then made via text message. In addition, the app can be used with registered merchants, and it now has over 1.2 million active users.
- The Danske Bank MobilePay app now has over 1.2 million active users
- There are currently over 3 billion and credit and debit cards currently in the market.
- Is the era of plastic card payments coming to an end?