As much of the payment industry keys in on mobile and contactless payments, it sometimes seems like there’s a “hit” out on the traditional plastic card. Today’s consumers are demanding convenience, security, and a touch of the cutting edge in their payment options ─ without added cost.
Bank of America’s recently reverted debit fee decision not only revealed the depths of consumer rage at the prospect of additional card fees, but fueled further discussion about the costs of supporting and protecting payment data, especially following the Durbin Amendment’s impact on interchange.
Financial institutions are stuck between providing access and affordability. Tackling security is a primary way for institutions to lower these cost burdens, without having to implement fees out of financial necessity.
With the exception of instant issuance, and in some countries, EMV (Europay MasterCard Visa) chips, much of the technology behind magnetic stripe cards is decades old. New waves of secure payment technology are emerging, and many of these seek to enhance, rather than replace, the traditional idea of a credit or debit card.
Here are three new trends with physical card technology to consider. Some may be solutions to vet and even implement among membership in the months ahead, while others may pose new competition. In either case, these solutions should be on credit unions’ radars today, before they appear in members’ hands tomorrow.
Consumer have come to expect display screens at bus stops and display screens in the back of their car seats, so why not on their credit cards?
The addition of a tiny digital screen is just one step in MasterCard’s strategy to beef-up security and usability in its credit card products. Currently in use at banks in Europe and East Asia, an embedded button on these cards generates a secure, one-time code, providing another level of authentication for online or over-the-phone purchases.
The existing technology could also be adapted to display transaction amounts and history, available account balances, spending limits, reward points, or other information, the company says in a press release. That could help stem traffic at contact centers and in branches. MasterCards’ market research indicates roughly 57% of debit card users would use a card with a balance display more frequently than traditional options.
Not everyone is comfortable with the idea of a mobile wallet, but no consumer enjoys carrying around five different cards to handle their various transactions. One company, recently awarded the Best of Show at the 2011 BAI Retail Delivery Conference, is bringing together multiple accounts in one package.
By touching one of several buttons on the front of a Dynamics Inc. card, consumers can actually rewrite the card’s magnetic strip on the fly, giving them access to multiple accounts. Citi is currently implementing this technology in its upcoming 2G card, which will allow users to choose whether they want to use credit for purchases or pay out of their rewards points, directly from the card.
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Video Payment Processing
Forrester Research advises the explosion of eCommerce in the United States won’t stop anytime soon, and is projected to reach nearly $279 billion by 2015. But the full potential of using cards for online purchases is hampered by concerns about safety and accessibility, leading many to switch to prepaid cards or abandon purchases altogether.
One upcoming solution from the company Jumio tackles these issues for consumers by removing the necessity for any additional hardware or applications. It allows any PC or mobile device with a camera to capture and authenticate physical card images. The company then collects the security code from the user, and processes the payment, mitigating concerns about PCI compliance for participating businesses.
Its trials report a 36% savings on fraud control costs and severely reduced the number of instances where legitimate payments were rejected. Making it not just safe, but easy, to pay with a card online can have a real impact on frequency of use, benefiting the institution and the end user.