The modern credit card was invented in 1950 and little has changed since. This small piece of plastic tells the retailer ‘sure there’s no cash changing hands right now, but you’ll get what you’re owed into your bank account’. More than sixty years on and the retail industry is now unrecognisable, and yet our plastic friends have remained loyally stowed in wallets and purses.
In an increasingly digital world, credit card services are set to change beyond recognition.
How much effort is it to reach into your bag, pull out your wallet, slip out a credit card and swipe it into the terminal? Too much in today’s super-fast digitally enhanced retail environment. Thanks to wearable tech, the shoppers of tomorrow (and even some today) can make their in-store purchase with the flick of a wrist, swipe of a finger, or even just by looking at it. By simply swiping the device across a terminal, the wearer will be able to transfer payments electronically, rendering traditional credit card services redundant. Google Glass wearers won’t even need to move to buy a product, as purchases can be made by simply looking at the printed QR code on the packaging. This is great news for retailers as quick and easy payment processes will make impulse purchasing even more prolific.
Of course just being able to make payments electronically doesn’t necessarily mean Mr & Mrs Public are keen to do so. A report from Citi and Imperial College London, released at the start of 2014, revealed that one of the biggest barriers to the development of a cashless society is the public’s reluctance to break with cultural norms.
The study showed that while the infrastructure in Germany is ready to make the leap, the adoption rate for electronic payments is relatively low, with cash still playing a role in a large proportion of transactions.
With an increasing proportion of purchases made online, obsolescence for credit card services now seems inevitable. Credit cards were created long before online shopping, a fact clearly reflected in the clunky process we all must endure in order to make a credit card payment online. Your online shopping is completed from the comfort of your own armchair, without the hassle of parking a car and trudging around busy shops. But when it’s time to pay, you need to drag yourself into an upright position, hunt around your house for your wallet, before locating your credit card. Next you need to tap in all the digits printed on the front of the card, in the right order no less, before messing around with drop down boxes to confirm the expiry date. In a world where it is now possible to pay for a
coffee by flashing your smartphone at a terminal, this antiquated procedure cannot continue.
A recent survey for the British Retail Consortium (BRC) revealed businesses are still incurring “unjustifiably” high charges for using credit and debit cards. The average cost charged to a retailer for processing a credit card payment has increased by 18% over the last five years. So while shoppers are finding the credit card unwieldy, retailers are also shying away from its use in favour of more cost-effective solutions.
However, the European Union is in the process of agreeing a plan to limit the amount banks charge retailers for card payments processing. This potential reduction in transaction costs may create a temporary revival of the credit card as a payment method.