Big new changes unveiled for credit cards
Regular readers already know about the coming EMV revolution that should soon see (in fact, American Express just launched one) U.S. credit cards come loaded with ultra-secure microprocessor chips. That's important because it could drive down some types of card fraud, but -- given that the technology has been around in parts of Europe for decades -- it's hardly the sort of innovation to get a technophile's pulse racing. However, the end of February saw Barcelona, Spain host the Mobile World Congress 2014, and plenty of amazing new card technologies were unveiled, demonstrated or discussed there -- including some that are due to be launched in April.
Mobile is the future?
After a slow start, it really is starting to look as if serious numbers of consumers are going soon to prefer paying using smart devices linked to their accounts rather than the plastic that's currently in their pockets. This is the service provided by so-called mobile wallets and other payment apps. In a recent press release, MasterCard quoted research that suggests the amount charged this way could reach $46 billion in 2016, up from $8.5 billion in 2011. That's a five-fold increase in five years.
However, we're not there yet. Yankee Group, a research and advisory firm, published data at the end of February that revealed that just 16 percent of smartphone owners had used their devices to make an in-store payment in the preceding three months. As bad, 73 percent of those users are making such purchases fewer than five times a month.
There was good news in the Yankee Group report for PayPal: 15 percent of consumers had used its app to make an in-store transaction in the previous month, close to four times as many as its nearest independent rival, Google.
So perhaps it's unsurprising that PayPal was a big innovator at the Mobile World Congress. The company announced that it had teamed up with Samsung to introduce a new way of authorizing a payment -- using your fingerprint. Starting in April, users of the Samsung Galaxy S5 who have the PayPal app can forget passwords and log-in information, and instead rely on fingerprint authentication technology. PayPal has posted a handy video online demonstrating how this should work.
The Galaxy S5 isn't the only smartphone with a fingerprint-scanning capacity -- Apple's iPhone 5S has one, too. Now Visa has revealed that it is actively exploring the possibility of authorizing payments using this form of biometrics on both devices.
Wear Your wallet
That Samsung/PayPal relationship has produced another innovation: You can now make in-store purchases using the PayPal app loaded on Samsung's Gear 2 and Gear 2 Neo watches. These devices, which come with about 4GB of internal storage, according to a Consumer Reports review, provide a wide range of functionality, of which this payment app is just one. If your ambition is to impress wait staff and store clerks with your cool, you may regard this as a must-have.
Wearable wallets may turn out to be one of the next Big Things, according to a number of experts in the payments industry. Smart watches are an obvious form for such devices, but some predict you could soon be authorizing a payment via a high-tech ring, bracelet, cuff link or even button.
Providing these can overcome obvious security concerns, the advantages of such devices could be considerable. Though there are disadvantages too: who wants to go jogging wearing cuff links, and how would you cope if you couldn't claim to have left your wallet at home when the check comes? But one day, maybe quite soon, smart devices may make traditional wallets and purses redundant as they come to carry not just a credit card payment capability, but also ID, such as your driver's license.
Credit cards getting under your skin
And, of course, ultimately you may not need to wear or carry a device at all. Although nobody's proposing such a thing at the moment, the technology already exists that could allow you to have a radio frequency identification (RFID) chip implanted under your skin (maybe in that loose section between your thumb and your index finger), and one of those could, in the future, provide payment and ID services.
Many Americans would be appalled at such a prospect. And the likelihood of it being offered anytime soon receded with the wave of outrage that occurred when some mistakenly believed that "Obamacare" would make these subcutaneous RFID chips mandatory. That turned out to be a myth, but the violent reaction to it means it would now take a brave innovator to even tentatively suggest their introduction. One day, however…
Published 03/17/14 (Modified 03/24/14)