How to keep cards relevant in times of new payment modes

Today, card issuers are innovating strategies to appeal to the new demographic as they fight the swift expansion of newer payment modes such as unified payments interfaces (UPIs). The customers’ behaviour towards cards has changed and people no longer want to carry a heavy wallet full of debit and credit cards. Despite all this, debit and credit cards continue to be the most accepted forms of payment globally and future growth is anticipated in most markets. The cards business is transforming and that will perpetually influence best practices for how card issuers engage customers, encourage frequent and consistent interactions, and reward customers for their loyalty. To lead the card business in the new era of payments innovation, issuers must have a strategy to ensure their card is the customer’s primary form of payment.

People look for the most convenient way to pay and will continue to do so. In the near future, card issuers need to find new ways to add to the ease of use—whether it involves smartphones or wearables. Whether the customer is initiating a transaction with their fingerprint, with a wearable, or a QR code, paying must be easy. Card issuers are looking to focus on convenience across payment channels to protect their business. Part of this strategy must involve optimising processes around lost and stolen cards, and the precision of tools and analytics the card issuer uses to predict or detect potential fraud.

Usually, when there’s fraud, the card has to be cancelled and reissued. By the time customers get the new card, they’ve already loaded another card to their mobile wallet, wearable, or whatever payment mechanism they use. Activation rates on cards that are replaced because of fraud have already started to dwindle the engagement. Card issuers need to determine how to replace a lost or compromised card without delay, and ideally, digitally. The whole experience must be seamless for the consumer.

Card issuers who want to lead will have to determine new and creative strategies based on the customer’s existing buying behaviours to ensure that their card is the easy and obvious payment choice. In markets where innovations like QR codes, payments embedded in chat services are increasingly dominating as preferred modes of payment, issuers and acquirers must quickly determine how to get on board with their own solution that offers the same level of convenience.

Along with this, card issuers should look to translate the best characteristics of cards to become digital-friendly. Card issuers must determine how the consumer can earn rewards they perceive as most important while making it the easiest possible experience to use the card to gain it top-of-wallet status.

Now more than ever, card issuers must now consider getting their digital payment mechanism at the front of mobile wallets and apps. They should try to make the payment frictionless and accessible while maintaining security and preventing fraud. To top it all, they should be able to remind customers that cards offer security and ubiquity while ensuring the digital payment mechanism is easy to set up and use.

If there is one thing one can count on in today’s card business, it is change. The card ecosystem is much bigger than just MasterCard, American Express, and Visa. To keep up, one needs card management and switching systems that connect to new payment schemes, enable innovations like mobile wallets, contactless, tokenisation and QR code payments, and ensure compliance with changing regulations and scheme rules.

In addition to this, the future holds much in store for the card universe. The payments industry needs solid groundwork before smart cities and connected transportation are a reality. Smart vehicles will help facilitate travel and benefits consumer’s everyday lives. Around 250 million vehicles will include embedded connectivity by 2020 which will require connected gas pumps, parking meters, toll booths, drive-in restaurants, and retail store pick-ups. This all presents a good backdrop for the cards.

Then there is augmented reality which is exceptionally suited to finance tech’s needs. What’s more, it comes along at the right time to be engraved into the industry’s source code. Consumers are more and more looking for two key things when it comes to finance and banking—speed and ease of use. They need payment experiences to be frictionless, hassle-free and seamless.

Artificial intelligence and machine learning can not only help in fraud detection and network operation, but can also power advances in consumer-facing technologies—such as loyalty programmes, chatbots, and voice assistants. Consumers will reap the benefits of greater ease and flawlessness that biometrics offer on the front-end which will ultimately help fuel the card payment milieu.

The present innovative card management and transaction switching solutions need to make sure that one doesn’t just stay in the payments race, but that one leads it. Better card management will help deliver the full spectrum of functionality through transaction switching and operational solutions. Thus, card issuers can attract new custom, reduce service integration costs and risk, and improve portfolio profitability.

Views are personal.

The author headed FIS’ India-based product development for the company’s flagship products in core banking and electronic channels.