New payment models may come and go, but the dominance of the simple plastic card is unlikely to be dented anytime soon, writes former HSBC techie Aden Davies.
Whenever some new fancy change to the ubiquitous plastic payment card my default reaction is usually negative. I know what let’s add something to the well known and used plastic cards that make it seem innovative! How about a real time balance display? A Passcode generator? A fingerprint reader? Let’s get a Kickstarter going to combine all your cards in one handy must be charged and Bluetooth connected to your mobile phone and can only be used in a country that has not implemented EMV yet* card, yeah? Please stop. I should embrace these innovative attempts to improve the humble and ubiquitous plastic card. They feel like like the embodiment of faster horse, which I agree with another Davies is not necessarily a bad thing but still are they really worthwhile?
*Coin coming soon in EMV flavour!
In the flurry of PR when these things are announced certain details are often left out of breathless press releases and masturbatory tech site reviews. Why not say how much they cost to make and issue in comparison to normal plastic? Say how many you will issue in this first phase and how you will be different from all those other plastic enhancement projects that never got past the (I suspect very limited) pilot stage? Be more honest about the realistic aims of these things.
Experiments yes but solving real issues? Really? Is this stuff really going to have a measurable impact outside of limited prototypes and trials? Yes mobile payments is still in its infancy, yes people are used to plastic but surely there are things between the two that move people along the seemingly inevitable journey to software based payment devices? But…not everyone has an NFC equipped smart phone. If you are too poor for a smartphone capable of these payments innovations then the chances are you are also too poor to be chosen for expensive plastic proofs of concept? Normal plastic cards probably cost under a dollar, these prototypes 10-20 dollars? Is that sustainable for a wider roll out?
But what if the little plastic card that could did continue to be ubiquitous and software did not eat it but just augment and cement that ubiquity? Are the plastic rectangles the optimal technology for payments? The plastic card links to the ecosystem very well via embedded infrastructure. How many 85.60 × 53.98 mm size slots are there in the world? Millions? Billions? Every Point Of Sale terminal, ATM, card payment enabled vending machine, parking meter etc. The move from physical to software brings some benefits but enough to phase out this infrastructure? Not any time in the next few decades.
The mobile can easily be tied to the interaction of the card and terminal today. Realtime notifications are becoming widespread for plastic interactions. The payment information can easily be tied to the mobile device. The back end systems to support payments and feed them to whatever realtime system needs them. The front end process and interaction has time to morph as infrastructure is upgraded. If it needs to at all that is. Plastic cards are already pretty good, durable, inexpensive, known & understood.
Whether or not the behaviour or value of paying with your actual mobile device will ever beat some other payment device i.e. card, sticker, embedded chip etc. I am not sure anymore. Can mobile interaction better the already pretty slick process of contactless plastic? Chip & Pin? Maybe America was forcing the hand of a move to mobile payments by choosing to go chip & signature instead. (You fine American folk seem to love paper almost as much as you love guns)
You can lead a horse to water…
Mobile payments adoption has been slow and fragmented so far. Even the deified Apple Pay is not getting the traction we had all hoped. Even rich people who can afford an iPhone 6 are too lazy to stop using plastic cards and paper money it seems. It may need a generational shift to make it truly mainstream, the children for which plastic swiping and inserting habits are not yet ingrained.
We are yet to see software based payments really come into their own. Tokenisation and in app payments and stores without physical checkouts are all at the experimental stage at the moment and there are a whole host of design and behaviour challenges to overcome before we move away from the act of inserting or tapping to pay altogether. For most plastic still is the main form of payment interaction.
The changes to plastic cards over the years that have made it to near ubiquity are those proposed by the EMV giants. Chip cards and contactless being the big ones. Very worthwhile changes at differing levels of adoption. All the other trials and examples have not really gotten close. Could that change? What if these trials involved more companies? What if some of those Kickstarter experiments actually were moderately successful? Results of trials were shared more widely? Opened up somehow? Share more and maybe the chance of growing and wider adoption increases.
If you really are as customer centric as you say you are then you are industry centric too and not just in it for yourselves. Hippy Utopian dreamer that I am I know this is probably unrealistic. When atoms are involved it gets harder, when payments networks and regulations are involved that difficulty level passes extreme add in ego, greed and competitiveness and we can see why payments evolution has taken so long.
The finishing line
What I would really like to see gain a lot of interest and PR is the results of these trials. Let us know how many people tried them, how far and wide they have been rolled out, Did they solve the problem you thought they would? Did new interesting problems arise? Will they replace all cards going forwards? Will there be a phase two? What have you actually learnt from the trial? Those answers are the rewards for the company running the trial I suppose (to the pioneer the spoils) but I think it would make for a much more worthwhile experiment and more laudable PR if more of the hypotheses and results were shared rather than just the shiny faster plastic horse. Show the thing yes, but show more of the thinking and working out too.
Aden Davies is a financial services and enterprise innovation specialist. Aden worked at HSBC for over seventeen years in a variety of technical roles across multiple businesses and regions. The last seven years in the Innovation Function. Aden's primary role was to research new technologies and trends and understand how they could impact both financial services and a global enterprise. He is now on the search for something new.