Why looks matter for 'top of wallet' credit cards

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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.

Card issuers and their manufacturers have had a burst of activity the past two years with the call for millions of EMV chip cards to be sent to U.S. consumers as the country moved away from total reliance on mag-stripe technology. Since it meant consumers would be dumping out their old cards and stuffing their wallets with new ones, issuers were trying every tactic to make sure their product landed on top.

"Nothing has changed in the world of cards insofar as all issuers want to make sure that when a consumer takes out a card ... they take out their card as opposed to one of the competitors' cards," said Martin Ferenczi, president of North America for the EMV card manufacturer Oberthur Technologies. "It remains a key concern because the card continues to be the most frequently used interface between a financial institution and their clients."

It's also upon card manufacturers to offer up new materials, designs and gimmicks. It's why Oberthur produces nearly 50 different card constructions with various materials.

It's also why Chase is getting so much notice for its metal card, and why a Discover It or a PNC bank-branded card with an orange core, rather than the standard white or black core, might stand out among rivals that use plain white plastic.

"You open your wallet and you immediately see what you want to use," Ferenczi said.

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.

The bank makes decisions regarding material costs from a customer experience perspective, such as the embedding of EMV chips for customer security, she added. "And the plastic materials used to build PNC cards are of high quality to ensure the durability and proper functioning of the card. We never want the quality of the card itself to be an issue."

It's not easy for the bank to determine how much of a role card design has in the success of a card, Herriott said, but consumer research has confirmed that "there's a certain emotional connection that an appealing design can create."

Because credit cards are often used in social settings, Herriott feels there is a certain "badge value" that a card has the can build positive associations with a brand.

Most often, an issuing bank will produce something new like a titanium card or a see-through card for high-value customers, said Alyssa Arredondo, the director of financial vertical at Entrust Datacard, which provides equipment for manufacturers like Oberthur to produce cards with the designs issuers request.

But issuers also have to be cautious when creating the fanciest card possible in the mind's eye.

"When I was with U.S. Bank, we had a cobranded partner and they wanted a black core card, but that can be problematic," Arredondo said. "A black card can show scratches and we were recommending against it."

Plus, a black core can create problems when being manufactured because many counters on the market use a light to go through the card. "When you have a black core, the light can't count accurately, and it might count a sleeve of 500 cards as just one card. Then you have to go back to the drawing board," she added.

Manufacturing problems aside, there is little doubt that a differentiating design can make a card helps it stand out.

"The card manufacturers had a really, really good ride with EMV and all of the demand, but what's the next trick here?" said Brian Riley, director of card services for Mercator Advisory Group. "Instant issuance might be one, but souping up the card is a basic one that works."

When considering all of the consumer features that are added to a Chase Sapphire card or an American Express Clear card, it is apparent that design is just one factor, Riley added.

"But there is a coolness to using the Sapphire card," he said. "You couldn't buy the publicity they are getting for the material they used in the card."

Beyond the materials used, issuers continue to dabble with other technologies such as dual-interface cards or ones that can change the security code on the back by pressing a button. But there are limits to what can be done.

"Those companies will come to us, and want to run these cards through the machine for embossing," Arredondo said. "Sure enough, the antennae breaks on the battery and they need to be tested for handling the heat when our machines are producing 1,600 to 3,200 cards per hour."

Another trend occurring in card design is personalization. More issuers prefer to see less information on the front of the card so that the name of the customer and issuer card stand out. The account number and other details move to the back.

"We are sometimes seeing the hologram usually on the front of a card is now going to the back of the card," Oberthur's Ferenczi said. Embossing of a card is also changing, as some are now being laser printed or flat printed, giving it a different look and feel and making it easier for instant issuing.

"I am convinced that how the same card looks on your phone for Samsung or Apple Pay is also important," Ferenczi added. "Some of these design changes for a cleaner front of the card may have something to do with a digital strategy."

Ultimately, an issuer has to decide what the return on investment might be for creating a card that stands out, yet might cost between $8 to $10 to create and reissue, as opposed to a standard plastic card that, at great volume, could be less than a dollar to create and maybe $2 to $4 to reissue for a lost or stolen card.

"Banks, in some cases, will charge for these cards, maybe $10 to $15 a year to have them," Arredondo said. "They have to test these cards and see if the technology negatively impacts usage. Overall, when looking at a road map for the future, they have to do it with the customer in mind."

Market requirements for physical cards will always play a key role in any design, material or embossing changes an issuer might embrace, she added.

Chase CEO Jamie Dimon recently told investors that it could take a few years for the company to cover the acquiring costs of its new Sapphire card technologies and design, which launched last year.

That means it costs an issuing bank a lot of money when signing up new customers and offering significant rewards and perks, but also when the cost of making that card has gone up to make it stand out as something special.

"When you look at the pain issuers have now in the reduction of interest revenue, the cost of issuing cards is an area they are going to have to look at," Mercator's Riley said.

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Credit cards JPMorgan Chase PNC American Express Oberthur Technologies