Reinventing plastic payments
From gold plating to silicon guts, the plastic card is not what it used to be. Here are some of the most ambitious attempts to make credit and debit cards relevant in a high-tech world.
Gold-colored credit card
High-priced plastic
Four times the weight of a standard credit card, Luxury Card’s top-tier card, issued by Barclaycard, is based on a steel-and-carbon body encased in gold that’s laser-etched with the customer’s name. Introduced last year, the 24K gold-plated card is designed for a consumer who wants to show it off rather than hop from card to card for the next big offer.

“It’s a statement piece, a real conversation-starter in business and social settings,” said Marina Kissam, vice president of customer experience at New York-based Luxury Card, which recently won a patent for its gilded card design.

As outrageous as the Luxury Card sounds, it's a natural extension of the direction the industry is taking. To turn a profit, issuers need to keep customers around for at least a few years, and the escalating race to top rivals’ rewards is beginning to undermine that goal, said Brian Riley, credit card director at Mercator Advisory Group.

“The elite card issuers are working now to hit on a value proposition that doesn’t depend on these rich introductory offers, because profits require customer longevity, not constant turnover,” Riley said.
PNC Bank signage
Heavy metal
Whether it is the Chase Sapphire Reserve metal card, the American Express Clear Card or a PNC card with an orange core, the message is the same — design is a big part of making a top-of-wallet card.

Surely, consumers must also like the Sapphire card's rewards, but they also felt so overwhelmingly that the metal material made it special that, in late 2016, Chase reportedly started running out of the cards.

For PNC, it was natural to take the bank's branded color of "PNC Orange" and apply it to the credit card itself. "Not only does it help to distinguish the card in our customer’s wallet but we want them to make that positive association with the brand whenever they pull out our card," said Tanya Herriott, senior vice president of credit card marketing at PNC Bank.

Still, PNC uses the orange core only in select cards. "We consider each product, audience and a variety of design elements when developing the card design—all of the elements need to work well together," Herriott said.
Square reader and card
Drawing attention
Mobile wallets should have come far enough along that we no longer need to attach plastic cards as a "bridge" technology, right?

Maybe not. In June, Square began opening up its previously invitation-only prepaid card to all of its customers. The product is a Visa-branded card linked directly to the user’s Square account balance.

One key difference this time around is the Square card is customizable with a business logo, signature or any other kind of doodle. Square seems to have a fairly high degree of leniency when it comes to designs, but does monitor for unsuitable content.

The customizable media is likely to make the card appealing to younger users, presumably as direct competition for the incoming Venmo card. Historically, other digital payment providers such as Google and PayPal have put out stored-value cards, neither of which gathered meaningful adoption.

“If you want to be top of wallet you need to be able to play both in the digital world and the physical world," said Michael Moeser, director of payments at Javelin. "Plus, since only 1 in 10 dollars are spent online, gaining physical POS dollars for digital players like Venmo and Square is pure uncharted territory.”

However, the motivation behind Square and Venmo’s plastic plays may be less about transaction volume and more about brand extension across the digital chasm, plus a playful means of getting millennials to apply for cards that they may not get to use often otherwise.
Scanning an Oyster fare card
Instant refunds
Transport for London (TfL) is launching an app facilitating top-ups, balance checking and alerts for low funds thresholds for its own Oyster card.

Future features will include a simple way to apply for refunds and review journey histories for all forms of contactless payment, with the latter due next spring.

This presents a significant upgrade to the current system that allows funds to be added to transit cards online, but requires a 24-hour wait and tapping the card at a specific station to bring the card's balance up to date. The new app will cut that processing time down to 30 minutes and remove the need to visit a nominated stop.

Nationwide, mass transit systems are transitioning from archaic cash-based systems to electronic cash-free networks, with numerous initiatives currently underway in metropolitan areas such as Boston and New York.

TfL’s move to the contactless Oyster card has been heralded as a huge success, but the upgrade announcement highlights that changes were not system wide and that any payment/ticketing network is a constant work in progress.

Nonetheless, mass transit remains an appealing Trojan Horse for driving card spend, or even just for acclimating a captive consumer base to the perks of contactless payments.

“They always talk about the killer app, that’s actually the killer use case,” says Jack Jania, senior vice president of strategic alliances at Gemalto Inc. “You use that same card for your transit, you use it twice a day, five times a week. It has a tendency to stay top of wallet.”
mobile card security
Consumer-driven replacement cycle
As the digital age reduces the wear on physical cards, how is it that some consumers are requesting new cards more frequently?

Despite the heightened security that comes with EMV chips and tokenization, consumers remain worried about their personal data being exposed in a seemingly nonstop parade of breaches. This leads to many cardholders requesting a new card as a precaution, even if they have no evidence that they were directly affected by a particular breach.

Farmers & Merchants bank, for example, rapidly issued about 800 EMV-enabled debit cards after fears about a breach earlier this spring. The $150 million-asset bank did not make an executive available for comment, but it was concerned about addressing customers' fears about breaches rather than responding to a specific breach, according to Rob Dixon, product director at CPI Card Group, which handled the card issuance.

"It's less about their cards being compromised than seeing news about a major breach at a place where they shop," he said. "The customer wakes up and sees a report about a breach, and wants to have his or her card replaced quickly whether they are a victim or not."

Dixon did not say how many cards get replaced across the market because of this fear, but given the rising number of breaches and the attention these breaches receive, it's likely this anxiety will be around for some time.

This trend may also drive the use of virtual cards, which can be reissued faster because they can arrive in an app.

"Mobile wallets have struggled to take off over the last 10 years, but as they gain traction, consumers will want to get cards and they won't want to go through the process of waiting for cards in the mail," Dixon said.
Visa cards
Investing in speed
Visa has led a $25 million investment round in open card issuing platform Marqeta, and the two companies will collaborate on consumer and commercial payment projects.

Marqeta develops technology that streamlines card issuance and payment processing, and is increasingly targeting e-commerce companies that authorize and control their own transactions through branded P-to-P transfers, virtual and physical cards. It also uses data analysis to power marketing and security risk management.

Marqeta's Just-In-Time, a feature that is included in Marqeta's core product, enables developers to sign up for a sandbox and use Marqeta's card controls and configuration to produce fully funded card programs in a few days.

Visa opened its own technology toolkit last year and the card brand has been actively investing in new payments technology. It's invested in Square, Stripe and Klarna, and its investment in Marqeta is different in that the other investments target merchant acquiring technology, while Marqeta focuses on card issuance innovation.

"We are always looking for partnerships and investments that allow us to evaluate innovative, new ways to support our clients’ needs, and increasingly see open, developer-friendly platforms as a way to help clients move quickly in today's fast-paced environment," said Jim McCarthy, executive vice president of innovation and strategic partnerships for Visa, in a press release.
Amazon Prime signage
Reverse rewards
On the surface, Amazon's new loyalty cashback program, Amazon Prime Reload, appears to be just another benefit of enrollment in Amazon Prime, the $99 annual membership program that provides discounts and access to a range of goods and services.

However, a deeper dive into the workings of the program — which offers 2% cash back when shoppers use a debit card or bank account to load an Amazon stored-value account — should give the card payments industry serious cause for concern.

Newer programs like Amazon Cash, a service that allows cash loading to an Amazon account at participating retailers, have set the stage for the debit and ACH-focused Amazon Prime Reload. Both of those programs cater to consumers who prefer cash and debit over credit.

Exploring the inner workings of Amazon Prime Reload provides some revelations on Amazon’s plans for its latest service.

After enrolling a debit card and bank account (Amazon chooses which to use when processing reloads), the next step in the process is to load value to the shopper's Amazon Balance with a $100 load set as the default and emphasised in bold. The 2% cash back is not provided at the time of purchase, but at the time of reload.

Amazon is subtly guiding the end user to load at least $100 to the account for and to burn through this to earn rewards. Psychologically, it is also abstracting the funds from traditional payment media, presumably to make the value stored by Amazon “fun money”, rather than a value that is coming directly from the weekly budget. Its use of the phrase “Gift Card Balance” is somewhat telling - this money is a gift, it just happens to come from yourself.

The launch of Amazon Prime Reload will not be welcome news to card networks, issuers and traditional retailers.

The banks and card networks fought relentlessly with PayPal over the years against its use of a similar practice of using linked bank accounts to cut its own payment costs. Visa and its peers finally convinced PayPal to change its ways, but it seems now that this battle was fought on the wrong front.

If Amazon succeeds in convincing shoppers to use their Amazon Balance instead of a payment card, issuer revenues from Amazon will dip dramatically as the retailer shifts more reload volume to ACH.