Cardtech: from plastic to fantastic
When is a payment card not simply a payment card? When it has a host of other technologies attached to it, making it a must‐have means of payment that’s guaranteed to be top of your wallet.
While the EMV contact and contactless payment applications that we are all familiar with remain at the heart of a today’s payment card, that’s not the end of the innovation story. Far from being something that consumers rarely give a second thought to the newest generation of payment cards are grabbing their attention with a range of innovations that make them indispensable.
We’ve been using chip‐based cards to make payments for many years now. In fact, many millennials will barely remember life before chip and PIN or contactless. They were developed to meet the consumer need to pay securely, safely and conveniently, so it’s perhaps no surprise that some of the latest advances in card technology are also focused on the continuing drive for greater security, convenience and speed at the checkout.
One of the biggest recent developments is the addition of biometric sensors to payment cards, something that’s increasingly being demanded by consumers who have become accustomed to being recognised by their fingerprint or face when accessing their smartphone or tablet. “This method of two‐factor authentication is secure, compliant and convenient, which is why so many consumers like it,” says Mikko Kähkönen, Head of Product Management at G+D Mobile Security.
G+D has a number of different approaches to combining biometrics with payment devices; one example being the pilot started French bank Crédit Agricole this summer. Further projects addressing additional use cases are in the pipeline and will be public soon.
Another advance on the security front is the move towards tokenization, which enables banks to turn an account number into a token that prevents fraudsters from identifying it. These tokens can be placed in various different physical devices like wearables, or used for eCommerce or transactions made on mobile phones.
Dynamic CVV technology is also becoming a game changer for secure online payments. This replaces the static CVV (three‐digit card value) with an electronic display screen that regularly generates a new CVV number.
There are plenty of opportunities to incorporate previously unthinkable technologies into the bank cards of the future, thanks to the miniaturization of technology and components, including – believe it or not – a loudspeaker.
The card industry is also committed to sustainability, and that’s why an increasing number of cards now being rolled out are made from materials such as wood and corn starch in a concerted effort to move away from plastics. One of the biggest advances in this area is Mastercard’s Greener Payments Partnership, which was set up by Mastercard, G+D, Gemalto and IDEMIA to establish best practices and reduce first‐use PVC plastic in card manufacturing. This is a significant step forward in helping to protect the environment when you consider the numbers involved: roughly 6 billion plastic payment cards are made each year, according to The Nilson Report. Although this is less than 0.015% of the total volume of plastic manufactured each year, using alternative materials for payment cards can still make a considerable difference.
Looks are important
Savvy consumers want their image and their status to be reflected in every aspect of their life – including when they make payments. While some may be opting to make certain payments via their smartphone using mobile payment services such as ApplePay, many still prefer to use cards, and the latest generation is definitely attracting the attention of fashion‐conscious consumers.
This is certainly true in China at the moment, where G+D has joined forces with a number of banks to sell innovative card bodies online. This groundbreaking service enables customers to configure their cards themselves, right down to deciding how they’re going to look. The design options aren’t limited to a simple picture card with the consumer’s own image. They can also select physical card elements and finishing touches which are delivered via 3D printing.
In addition to interesting new designs for traditional plastic cards, banks and financial services firms are starting to offer their premium clients the luxury of metal cards. A beautifully designed metal card guarantees a real feeling of exclusivity and is sure to turn heads when it’s time to pay, while at the same time positioning a bank brand as truly premium.
To meet these rising demands, G+D’s new partnership with HIT means that together they can offer a portfolio of metal payment cards that not only provide a seamless user experience but also have the looks to match.
Go beyond the card
The physical card is just one part of a long process in the payments chain, which is why an increasing number of companies, such as G+D, are also offering bolt‐on services. These include digitising the account opening process and improving communication with cardholders, by SMS, WhatsApp or Messenger, to keep them informed about where they are in the process and when they can expect their card to arrive. This is also an opportunity to offer consumers the chance to instantly get a digital card on their mobile while they wait for the physical one so they can experience this latest way to pay, or to encourage the use of secure remote commerce by tokenizing the cards that they have already.
“At G+D we’re noticing some significant differences and trends in different regions’ adoption of some of the latest card technologies,” says Kähkönen. “For example, in the US, we’re seeing a drive towards premium offerings such as metal as well as a push towards dual interface integration. In India, dual interface technology is gaining momentum and the market is rolling out products with an integrated service area for adjacent use cases. In China, beyond the QR code, it’s all about innovation using augmented reality and gamification connected to the card offering, and in the broader APAC region, the focus is on digital, but mainly for innovation in what we could call #mefirst.”
What do all these developments mean for the future of card‐based payments? The industry is optimistic about their prospects, particularly given recent developments which demonstrate how the industry has managed to adapt and deploy new technologies, substrates and services that address the needs of consumers in 2020 and beyond. As the cards industry has matured and consolidated, the survivors that have emerged have been those most committed to making substantial annual investments in research and development to support the evolution of different shapes and forms of payment.
And, although its shape or form may change in the future, industry leaders believe there will still be demand for some kind of physical payment token. It’s interesting to note that Apple – a company famous for its focus on consumer experience and investments in payments – has launched its own physical card, despite the popularity of mobile services such as ApplePay and GooglePay, which are providing new ways for consumers to make purchases via their smartphones. It seems likely that feedback from consumers using Apple Pay indicated a continuing appetite for physical cards. As it’s extremely difficult to change user behaviour in the short term, it makes sense for Apple to give consumers the option of a physical card as well.
A card is not only a card but the financial ID for customers to connect to their banking accounts
-Mikko Kähkönen, Head of Product Management, G+D Mobile Security
“A card is not only a card but the financial ID and brand element for customers to connect to their banking accounts,” says Kähkönen. “This means that, regardless of the form factor, a card is still at the heart of the transaction, whether it is plastic, digital or virtual. With this connectivity there is an opportunity for new revenue streams such as added‐value offerings connected to the card. These can be premium programmes, easy enrolment to new services, mobile authentication for payments on the fly, or individual card design.
“Not only will this support growth for banks but also create stickiness and brand retention. Additionally, it will impress and attract consumers by providing them with state‐of‐the‐art offerings that ensure their everyday finances are convenient, safe and secure.”
The pace of development in the cards and payments market has varied widely worldwide, with some regions being early adopters of EMV and others much slower to embrace the technology. Likewise, the move towards innovations such as biometrics and new substrates varies from country to country. In some regions, neobanks have been keen to gain first‐mover advantage and position themselves as disruptive digital payments firms through the introduction of innovative cards and technologies such as tokenization. Card companies need to remain agile and constantly reinvent themselves to keep up with the demands of increasingly savvy consumers. They also need to stay close to their customers to innovate and tackle challenges in an increasingly cut‐throat business.
“Consumer behaviour is driving the way we pay,” says Kähkönen. “This means there is a need for the industry to put customers first and have processes that can easily adapt to change. “Catering for your customers on time and on demand will be the key to success, regardless of whether you are a traditional bank, a fintech or any other type of financial service provider.”
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