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Credit card technology: 2013 and beyond

by Peter Andrew

Since the prediction about the Mayan calendar fizzled, let's take a look at some predictions we laid out in an article last year titled Credit card technology: 2012 and beyond. Our forecasts (pinched, as always, from expert specialists) for how credit card use might evolve hopefully proved to be a bit more on target.

Credit cards transforming before our eyes

And we -- or, rather, those experts -- didn't do too badly. All the technologies we explored remain on track to make it big:

  1. The four big payment networks have each published a road map for rolling out across the United States EMV, the chip-and-PIN and chip-and-signature technology.
  2. Offers from your credit card companies sent directly to your smartphone and based on your precise geographical location (a particular aisle in Walmart, say) edge ever closer.
  3. Mobile wallets and other ways to pay from your credit card account using your smartphone, tablet or similar device are already beginning to take off.

Mobile payments

The extent to which those mobile payment opportunities are exploding became clear recently, when three innovations, each from a different company, were announced within three working days:

  1. On Dec. 3, US Airways said it had become the first airline in the world to accept payments for in-flight purchases using MasterCard's PayPass technology. This allows you to pay using credit cards, smartphones and tablets that have near-field communications (NFC) technology, and have been registered with this MasterCard service.
  2. The same day, USA Technologies and Isis unveiled plans to enable some 7,500 vending machines in and around Austin and Salt Lake City to accept payments using NFC-compliant cards and devices.
  3. On Dec. 5, NCR launched NCR Mobile Pay. This should allow diners in restaurants that adopt the technology not only to pay their bill using their smartphone or tablet, but also to browse the menu, re-order dishes, request a receipt via email, provide feedback and summon their server to their table -- all online.

Prepare to be wooed

By now, you're probably telling yourself how little all this matters to you, and that you don't see yourself as someone who would ever want or need mobile payment services. After all, you can already pay using your credit card on US Airways flights, and waving your hand to attract a server's attention seems to work pretty well. Come to think of it, if you're in the sort of restaurant where hand signals fail, how likely is it that staff are going to respond more quickly to being summoned from cyberspace?

Of course, you have a point. But, chances are, when you first read about cellphones you told yourself much the same things. Now look at you.

You can expect credit card companies and other interested parties to launch very soon campaigns to seduce you into becoming an early adopter of mobile payments technologies -- if, that is, you aren't already. That NCR press release included forecasts from Gartner, a global market research and analysis company, about just how quickly mobile payments are growing: worldwide, they're expected to process transactions worth $171.5 billion in 2012, up 61.9 percent on 2011. These same analysts predict they'll top $617 billion in 2016, by which time there could be 448 million users. Yes, we're talking more predictions. But those in the know regard Gartner as considerably more credible than the Mayans.

Go with the flow?

Back in the 11th century, King Cnut (or Canute, if you prefer) dragged his court down to an English beach, where he commanded the incoming tide to recede. Of course, he knew it wouldn't, and the exercise was designed to demonstrate to his hangers-on that he did not have limitless power. You may have sympathy with His Majesty as you watch wave after wave of new technologies crashing onto the shifting sands of your life. Indeed, you may find yourself deciding to go with the flow when it comes to mobile payments, because credit card companies are likely to love them.

That's because they could well assume that consumers will latch onto these, just as they have to mobile banking. Remember when only a tiny minority would entrust their financial affairs to the web? That time's long gone, and now it's mobile banking that's becoming commonplace.

The 2012 edition of Bain & Company's annual Customer Loyalty in Retail Banking Report was published on Dec. 11, and it says that those who use mobile banking generally love it. In fact, while many big-bank customers score their loyalty in negative numbers, those who access their accounts and services using mobile devices on average view their banks positively. All this, and it's much, much cheaper for financial institutions to deliver services using these new technologies, compared with traditional interactions.

Not the end of the world

So yes: it's likely your credit card companies will soon begin to do all they can to tempt you into some form of online payments system. But it's hard to see a way in which they can force you to do so. If you like your credit cards just the way they are, you're probably safe.

And remember: any future changes in credit card technologies, just like the end of the Mayan calendar, won't be the end of the world.

Published 12/31/12 (Modified 11/20/13)


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