The power of plastic.
By Suvo Sarkar, special to Gulf News
Dubai: What is wafer-thin, fits in wallets, packs paying power, security and portability, and can open doors around the world (sometimes, even literally)? The answer is: a payment card.
Ever since Frank McNamara brought out his Diners Club Card to pay for a meal back in 1950, using a card for transactions has been a combination of style, security and convenience. Today, a single piece of plastic, ubiquitous to wallets, contains everything including identity information, biometrics and payment capability.
A card is many things to many people. For a young millennial, a credit card presented on a birthday is a rite of passage into adulthood. For a football fan, it is to show where his heart is when he proudly flashes a co-branded card with his favourite club's logo. For a frequent traveller, it is a means to earn free miles and upgrades, for the upwardly mobile to quietly flaunt their status, and to the courier boy who delivers your packages, the account where he receives his salary. Payment cards today make up two-thirds of all non-cash transactions globally and their share continues to grow.
Part of popular culture
Such is the power of this slim payments packer that cards have fascinated literati and movie makers over the years. From writers who foresaw the emergence of cards way back in the 19th century to movies that glamorised plastic power, the card has been a favourite of pop culture. In the iconic shopping scene in the movie Pretty Woman, the star is as much the credit card, with the hero concluding: "Stores are never nice to people. They're nice to credit cards."
Stores are indeed nice to cards since they were one of the first few to introduce the concept of stored payment data. Back in the 1920s, department stores in the US, such as Bloomingdale's and Saks Fifth Avenue, would issue charge plates or coins. These round or rectangular, mostly metal predecessors to credit cards came equipped with the customer's account number, name, and an address. Today store cards issued by Target, Costco and other chains offer frequent shoppers discounts, cashbacks and free shipping.
Back to the future
Matching pace with innovations in digital payments, credit card technology continues to be at the forefront, ensuring that issuers continue to serve this growing market segment with the latest in convenience and security.
Today innovations in payment cards incorporate biometrics along with dynamic PIN updates on the card, ensuring maximum security. Metal cards are gaining popularity at the premium end of the customer segment. Another innovation changes the card number and the CVV (the three digit card verification value on the back of the card) dynamically, every 20 minutes, minimising fraud possibilities. Emirates NBD recently announced plans to introduce the Wallet Card that will allow customers to access all their credit and debit cards on a single plastic, and also incorporate a cell phone chip for instant communications with the bank. The day when you will be able to pay for your pizza from a car 'connected' to your card or browse and buy jewellery using virtual reality is not far away.
From cashless to cardless?
With the emergence of fintech-powered digital wallets, unified payment interfaces, eco-systems such as blockchain and crypto-currencies, will we move from a cashless to also a cardless society?
Cards are now starting to be in as many mobile apps as physical wallets, enabling a user experience such as with Uber when you just walk away after a ride, or indeed at the new Amazon Go store that opened recently with no checkout counters. Apple Pay now enables you to pay for your coffee with the tap of your phone or for your air ticket through a click on your app. Some banks are testing contactless in the form of wearable devices like rings, watches, bracelets and key chains. Some others like OCBC have stand-alone mobile payment apps which allow for QR code based payments. The recent Chase and Paypal tie up is another example of collaboration by two payment giants to drive cashless spends.
In a world increasingly saturated with payment options, the consumer has a choice to pay in cash, by card, with their phone, or perhaps in the future, without having to lift a finger at all. The challenge for banks is not necessarily in offering the single best option to the consumer, but rather, providing the most convenient payment method at any given time. The evolution of payments is one of choice, not of displacement.
Suvo Sarkar is the senior executive vice-president & group head of Retail Banking & Wealth Management at Emirates NBD
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