Rather than killing off the plastic card, smartphones are strengthening it. Many issuers' card accounts are more valuable than ever, with perks made possible only through the development of smartphone apps.
It used to be that to turn off a card, a consumer would have to report it as lost or stolen. But if the card is only temporarily missing — say, left behind at work or in the car — it makes more sense to disable the card until the consumer can reclaim it. Options like Discover's Freeze It enable consumers to do this through a mobile app.
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Know your customer's location
The GPS built into every smartphone is a valuable tool for risk management. If a cardholder agrees to share his or her location, that can be used to determine whether the customer is present in the vicinity of a card's use. If a cardholder's phone is in Kentucky and the card is in Rhode Island, perhaps something is amiss.
Instant mobile issuance
When a card is truly lost or stolen, the cardholder must typically wait for a placement to arrive by mail. Citi allows customers to track this process via mobile, removing some of the ambiguity over when cards will arrive. The app also allows users to dispute charges and change their credit limit without talking to a representative.
A link to loyalty
Typically, store loyalty cards and payment cards are separate entities, requiring one to be scanned to earn points and another to be swiped or dipped to complete the purchase. Kohl's was able to combine the two into a single action through Apple Pay, where one transaction links to the customer's loyalty account and private-label store card. For stores without such a link, Apple Pay and Android Pay can still store loyalty cards separately.
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No more checkout
Concepts like the Amazon Go store eliminate the checkout by relying on what they already know about the customer, including which credit card they use. And to sweeten the deal, shortly after Amazon announced its checkout-free store, it also upped the rewards on its co-branded credit card for the more than half of its customer base that subscribe to its Amazon Prime service.
No more passwords
3D Secure, a system that allows issuers to request additional verification during an e-commerce transaction, was much clunkier in its original form. Mobile devices are changing that; rather than prompt for a password, Mastercard now allows its issuers to request facial biometric verification through a user's smartphone — a concept commonly known as "Selfie Pay."