As consumer spending trends, security threats and technology change, credit card issuers like banks, credit unions and partner retailers and credit card companies keep pace with these changes in a variety of ways. New trends typically involve updates designed to make the use of credit cards more attractive to consumers and create strong, long-term issuer and cardholder relationships. These trends also focus on payment convenience and safer transactions. This guide outlines some of the newest trends in four areas:
Plastic is on the way out. Many companies are experiencing pushback from customers overwhelmed by news about plastics destroying the environment. Consumers have also shown an increasing desire for more durable cards that better reflect their financial status and personal tastes. Black cards have traditionally filled this role for top tier cardholders. A return to the more widespread use of metal has become the latest trend. Although certain types of metals, such as gold, remain reserved for richer cardholders, other consumers can expect to see more stainless steel and low-cost metal options. Companies also plan to offer more diverse designs that include etched, punched and customized images and more card shapes and smaller sizes designed for those people who desire cards that create less waste and take up less space.
Companies will continue to phase out magstripe technology and focus more on promoting insert chip and contactless or tap transactions with or without a signature or pin number. Magnetic stripe data storage isn’t as durable or safe as an EMV chip, for example. Damage to the black stripe often results in irritating checkout situations with a cardholder or cashier repeatedly swiping the card or even using a plastic bag over the stripe to help a credit card machine read the data. Additionally, a magstripe card far too easily allows criminals the opportunity to double swipe through a hidden reader at a cash wrap or restaurant or a skimmer at a gas pump. A move away from magstripe makes more design options possible, reduces some checkout hassles and creates better security against thieves.
Banks, retailers, and others will increase efforts to convince customers to give up credit cards and use mobile payment apps. Mobile payments allow issuers and merchants to offer more transaction, product and service options and connectivity. Contactless payments also save credit card companies money by reducing the volume of physical cards that they must create, ship, track and replace. That said, a lot of consumers still don’t own smartphones, use apps or trust virtual transaction security. They like to hold a physical card in their hands. Also, global negative feedback in recent years about mobile payment transaction problems, including checkout hassles and delays and costly app errors, have made the public, in general, less likely to trust the tech. Banks have had a lot of compatibility problems with their apps not always working smoothly with certain phone operating systems or retailer equipment. Merchants who have invested in branded credit products and their own compatible custom-designed mobile payment apps and hardware have had fewer problems. They can convince customers of the value of the tech when errors occur by tapping into existing loyalty and trust. As a result, they’re expected to push mobile payments the most and see the highest positive outcomes.
Although issuers plan to increase APRs and late payment, over-the-limit, and other fees to match federal rate trends and other market changes, merchants can expect more consumer credit usage. Low unemployment and a better job market have resulted in issuers offering credit products to more people in the process of rebuilding their credit. Companies have also started to offer personalized perks to cardholders with good and excellent standing, especially those who set up recurring payments, to increase spending and build loyalty. Instead of short-term cashback as the primary incentive, companies are increasing customer service convenience options like chat app message recordkeeping and credit score update notifications and customizing reward points, cashback and partner discounts offer to match specific cardholder spending habits and stores, brands, products, and services. Lastly, companies plan to offer more incentives for sign-ups, balance transfers and mobile payment usage, including longer zero percent interest periods, first-class travel upgrades and even higher partner discounts, above 50 percent off, on products and services.
Now is the time for merchants to start thinking about how they can not only stay up-to-date with these credit card processing trends but also benefit from them. You can increase your payment offerings at the point of sale and improve customer relations by investing in one or more inexpensive models of credit card machines or cutting-edge virtual point of sale terminals that offer swipe, EMV chip, and contactless smartphone functionality. These options also give you the ability to handle payments via gift cards and even your own co-branded credit card product.