How plastic cards can flourish in a world of digital payments
It's impossible to predict how long consumers around the globe will cling to using plastic cards for payments, but not uncommon to hear predictions of the product's demise.
Entrust Datacard, which serves both sides of the physical and digital payments spectrum, sees the categories' fates as intertwined. The more momentum digital and mobile wallets have, the more opportunity they create for their plastic counterparts.
"Cards are here to stay, that's all we say about it," said Alyssa Arredondo, director of financial vertical marketing at Entrust Datacard.
It's an important mantra for Entrust Datacard, which is four years into identification card manufacturer Datacard Group's acquisition of digital identity and information provider Entrust. The deal was designed to bolster identity-based security solutions for mobile, but Datacard's core business of instant card issuing and transaction security plays a key role.
An ongoing trend of mobile channels also offering a plastic card as a payment option, such as the recently announced Venmo card, gives Entrust Datacard more reason to believe its core business with cards has a healthy future.
"It's interesting as to what types of vehicles are going to the card business," Arredondo said. "Many P2P apps, such as Venmo, mPesa, Square Cash and PayPal, all issue cards."
Another example is cryptocurrency cards, she added. "Everyone is mining cryptocurrency, but what value is it if you can't actually spend it to buy what you need?"
Cryptocurrency companies have been partnering with Visa to produce credit and debit cards on which bitcoin can be converted to a local currency and loaded, but Visa also shut down many bitcoin wallets this year after it determined issuer WaveCrest was not following Visa rules.
As the use of cards to complement mobile or crypto channels continues to shake out, Entrust Datacard points to other trends that indicate the physical card world is indeed bullish.
When speaking to the Entrust Datacard sales staff or making a presentation to card networks and other providers, Arredondo makes the point that the compound annual growth rate of cards shipped globally is a positive 3.3%, with debit cards and dual-interface cards driving that growth.
Entrust Datacard also predicts that contactless cards will become more popular than paying with mobile devices at the point of sale, because they are faster and easier to use. Part of that rests with the growing number of city transit networks turning to contactless cards as a key payment tool, while also introducing mobile ticketing apps.
In the mobile realm, the growth of QR codes, especially in China and India, will fuel growth in cards because the main goal is merchants seeking ways to accept non-cash payments, Arredondo said.
Online-only financial companies such as Transferwise, Kabbage and Hyperwallet (recently acquired by PayPal) also offer payment cards.
But a key aspect of the physical card doesn't get mentioned as often as how mobile and other digital technology will interact with it in the coming years.
"The card remains an important showcase for the bank and the card network," Arredondo said. "It's a brand tool and a marketing tool."
Because of this, many issuers have begun issuing metal cards or cards with colored cores to make their products stand out more prominently in a customer's wallet.
"Nothing can replace the 'clink' of putting that metal card down on the table to pay for a business dinner, or a consumer taking out a card and placing it on a counter at the POS," Arredondo added. "That would all be lost if it is digital and loaded onto a phone."