Credit cards came a long way after Bank of America launched the first card in the 1950s. Fast forward to this day, these cards are payment staples worldwide. As per Statista, the US can have up to 27.8 million credit card users by 2028. Consumers’ inclination toward credit cards depends on the value they provide.
However, the credit card payment ecosystem is revolutionizing rapidly. Financial service institutions embraced technology to maintain users’ trust in this banking system.
So what’s on the horizon for this industry? Let’s find out.
Biometrics to Strengthen Security Protocols
Nothing scares a consumer more than security breaches. The credit card industry has been a target for bad actors for many years – no denial. To curtail this issue, card issuing companies are leaving no stone unturned.
Fintech institutions are optimistic about biometric authentication to verify transactions and prevent fraud. Biometric credit cards use a built-in fingerprint reader technology to verify the cardholder’s identity at the point of sale. Since no one can falsify another person’s fingerprint, fraudulently initiating payment is impossible.
Further, the future holds the possibility of voice-based credit card payment verification and facial recognition-based POS.
Advent of Virtual Cards
Cashless transaction is a new normal that accelerated post-COVID-19. Today, an ever-growing number of consumers prefer digital payment modes. With this shift, the fintech sector introduced virtual credit cards. Users can now link their credit cards with e-wallet apps to pay anytime and anywhere. It also removes the hassle of carrying cards for the users.
Now the debate is whether virtual cards will switch places with traditional plastic credit cards used for decades in the market.
Digital or virtual cards serve the same purpose as traditional plastic credit cards. However, they come with added perks. For instance, the AI integration will allow users to easily track transaction history and credit usage.
Growth of BNPL Transactions
Buy-now-pay-later (BNPL) is a new trend in the consumer landscape. According to Motley Fool, 39% of US residents are willing to try BNPL service within the next six months.
Currently, the Mastercard Installments solution allows consumers to buy products via the BNPL method. Apple Pay also partnered with the company to launch its BNPL products known as Apple Pay Later.
Soon more Payment networks will start accepting technology-enabled BNPL systems, including on-card BNPL and virtual-card-powered BNPL services. It’ll help the purchase experience for credit card users. Besides, Network BNPL solutions could make this service accessible for more merchants and small businesses.
With the popularity of virtual cards, more consumers may likely adopt tech-enabled BNPL solutions for payments.
AI for Fraud Detection
As hackers are using sophisticated methods, card-issuing companies also evolved. Expect Artificial Intelligence will do wonders in fraud detection during credit card payments.
Whether paying on e-commerce sites, online casinos that accept credit card real money, or POS, consumers don’t need to worry about data breaches anymore. This technology will identify users’ shopping patterns and manage payments to regulate fraud.
With no manual monitoring, companies can quickly detect fraud in the early stages. Thus, it can help protect users’ banking data and money during transactions.
Hyper-personalization
Get ready for a bespoke purchase experience based on your payment needs. With a hyper-personalization strategy, card issuers can create personalized offers and rewards based on users’ financial goals and spending habits.
Consider hyper-personalization as co-creating experiences with card users. It means fintech companies provide services that adapt based on consumer’s card using behaviors, spending habits, and financial goals.
Besides, consumers can get a custom option to use the card only in regular stores or for a single purchase. They’ll even be able to set credit usage limits for specific purposes.
Virtual Burner Card Solution
Another critical step against credit card fraud is the “virtual burner card.” Also known as a masked credit card, this technology will enable consumers to hide their data from merchants and malicious actors.
It’ll protect sensitive user data from online threats even if cybercriminal hacks into the business system. This cutting-edge security system will also help reduce “Card Not Present” fraud.
FAQs
1. What is Buy-now-pay-later?
BNPL is an alternative financing method that allows consumers to buy products through interest-free installments. They can repay the amount at a stipulated period with fixed payments.
2. What do you mean by Card Not Present transaction?
Card Not Present fraud (CNP) is payment fraud done without a card physically present. It can happen through mail, phone, or digitally.
3. What are the biggest innovations in credit card technology?
BNPL, AI technology, virtual cards, and biometric security are the latest advancements reshaping the credit card industry.
4. Is biometrics safe for banking?
Yes, biometric authentication is an effective solution to protect cardholders against fraudulent activities.
In a Nutshell
Financial institutions are revamping their strategies to retain meaningful engagement with the consumer. The focus is on better security and a seamless payment experience.
Undoubtedly, the future for credit cards is bright, with more breakthroughs in the tech industry.