New credit card technology is the future, but what does it mean for consumers?

by Darwin on April 11, 2012

When it comes to paying for items, consumers and merchants want it to be faster and easier, but not at the expense of security, which why we probably won’t see the venerable plastic credit card replaced by new payment technology anytime soon. Security still ranks highest among all of the requirements consumers have for choosing their payment methods, but even though hackers and identity thieves have found ways to breach the security of credit card transactions, consumers are more likely to stick with technologies they understand. Biometrics and near-field technology (mobile payments) are promising technologies that can actually increase payment security, but it’s still the stuff of science-fiction to many. So, what does the future hold for credit transactions?

It’s not just consumers who are slow to adapt. Financial institutions can also control the pace of technology. Changing the credit card information and technology infrastructure can be expensive, and if the banks don’t see an immediate payoff, it may not happen very quickly. Take EMV technology, for example, which has taken off in Europe and other parts of the world.

It’s essentially an imbedded chip that enables scanners to capture account information with just a wave of the card. The chips also contain security features that thwart the typical methods of identity thieves and fraudsters for stealing PINs or counterfeiting cards. It hasn’t happened here in the U.S. due, in large part, to the massive change required on the part of the banking infrastructure and the cost to merchants.

On the Verge of New Technologies

One new technology that shows tremendous promise for speeding transactions as well as increasing security is biometrics. It’s already being used in a number of applications for identification. For example, it’s used to identify members of health clubs, and it has been used at Disney theme parks for years. The technology exists to link a person’s fingerprint map to his credit account information, but when it comes to their money, people are wary of the security issues.

We’ve all seen too many movies in which the bad guys lift a fingerprint from a wine glass and then form a latex mold over their own finger to gain entry to a vault. The real technology not only scans the surface of the finger print, it also scans the veins beneath the skin, which would prevent fingerprint theft.
Currently, much of the effort to advance payment technology has centered on mobile payments using smart phones. A relatively new technology called near-field communication (NFC) is at its core and it allows users to wave their phone at a terminal, much like the EMV-credit cards used in Europe.

Some vendors are experimenting with this technology by equipping vending machines with NFC scanners. Once again, however, consumers are somewhat leery of using smart phones for payments due primarily to their security concerns. That’s the biggest reason why smart phone banking was slow to catch on.

Just Don’t Take Our Cards Away

Some payment technology analysts see the next big advancement as a technology upgrade on the thin piece of plastic itself, which would always be easier for consumers to adapt to because they understand plastic credit cards. There is still a move afoot to adopt the EMV (imbedded chip) technology. It’s already working in Europe, and it is being tested in certain markets in the U.S. Tech companies are also experimenting with app technology that would enable credit cards imbedded with microprocessors to receive new applications that would expand their capabilities at the consumer’s direction, much like they can do with their smart phones.

Consumers can add security layers or transaction capabilities such as dynamic magnetic strips and NFC payment. It is conceivable that consumers will only need one thin card, which can contain multiple accounts that can be accessed by toggling between them. A small screen on the card would illuminate the account number the consumer wishes to use.

Throughout our country’s history technology has always advanced, just not as quickly in some cases. People have been using credit cards for more than half a century, and while they always seem ready for the next technological advancement, they don’t seem especially anxious to give them up. Undoubtedly, our credit cards will look and act much differently in the future, but when it comes to their money, consumers would probably prefer to take baby steps.


Monica Clark is an Author and editor for where she helps borrowers find low interest credit cards and financial products.

{ 1 comment… read it below or add one }

krantcents April 13, 2012 at 1:12 pm

In the early 70s, they talked about the checkless society. It has taken years to change people. It may take another generation to really make changes.


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