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finance & strategy
Special Section: Cards Still Present
The Future of Physical Payment cards
5 reasons physical cards will continue to play a key role in payments for years to come, according to Render Dahiya, president and CEO, Arroweye.
1CarDs always work.
Clearly mobile and digital payments will grow, but I don’t see physical cards going away any
time soon, for a number of reasons. Mobile is still
an emerging channel, and even those who eagerly embrace m-payments want a reliable backup payment option in case their smartphone battery dies, or the service doesn’t work for any reason.
2MobIle-only PrograMs often laCk MarketIng PunCh.
Electronic payments of all types have been
evolving for some years, but the physical card com- ponent continues to play a key role in establishing and sustaining the brand. We’ve seen several ex-
amples of companies that introduced a mobile-only gift card or loyalty program but later added a card to raise visibility and reinforce usage. Clients consistently report that even when all the customer needs is a phone number to identify their member- ship in a program, giving them an actual card makes a huge difference in getting initial consumer at-
tention and sustaining interest over the long haul.
At the same time, we’re seeing an increase in demand for unique card types, such as custom designs, vertical (i.e., portrait vs. landscape) layouts and flat-printed formats. This further reinforces the marketing value
of a physical card.
3‘VIrtual’ gIft CarDs Don’t feel the saMe. There’s been tremendous development in virtual gift cards, but the reality is that 80 percent of
the gift card business is still in physical cards. People are comfortable with digital products, but they’d still rather present someone with a physical gift card in most instances because it’s a different experience than the virtual option.
4eMV Is DrIVIng reCorD CarD ProDuCtIon anD awareness.
The U.S. shift to the EMV standard is driving
a big uptick in card production over the next year,
as every magnetic stripe card needs to be replaced with a card that contains a chip. And in 2017, the fuel pump shift means that even more cards will have to be EMV. The effect: More cards are getting pumped into the marketplace in every category, including credit, debit and prepaid. EMV card technology is more complex, and producing cards with chips is significantly more expensive. To capitalize on that investment, issuers are boosting customer marketing and communications around EMV card shipments to drive awareness and usage. Many are finding that the EMV shift is a great opportunity to reconnect and re-engage with consumers, with the net result that cards are more than ever at the forefront of financial institutions’ relationships with consumers.
5
a rise in card-not-present fraud and this is also ex- pected to happen in the U.S., even as the general acceleration of e-commerce is driving an increase in online card fraud. In most cases new fraud incidents— and fraud from data breaches—means reissuance of cards for affected accounts.
fallout froM frauD Means
More CarDs.
In every other market, the shift to EMV triggered