If you’re a fan of plastic payments, it may be difficult to imagine a world without credit cards. It’s no wonder they are such an ingrained part of society. Credit cards have been around for nearly a century!
Credit cards by merchants offering customers an alternative payment method at their store. It was an evolution of the “IOU.” It wasn’t until the 1950s that we began to see credit cards as we know them today, which can be used at a wide range of establishments.
While credit cards are a staple of modern finance, they’re still evolving — and the way we interact with credit cards (and other financial transactions) is evolving as well.
Today, many of us go online to manage our banking and finances, but that’s just the beginning. Have you pulled out your cell phone to make a purchase? If not, you may be doing so sooner than you think. That doesn’t mean credit cards are going away anytime soon; new, microchip-embedded cards are improving security with every scan.
More and more consumers are turning to the Internet when it comes to managing their bank accounts. Many banks offer online access as part of their standard service. Typically, customers can view account balances and see transactions, including withdrawals and credits. In some cases, customers can transfer money or make payments online.
The popularity of online banking makes sense; so much of our lives are online, and online banking offers the convenience of real-time information. Some banks take things a step further and are only online. is an example of this trend. Described as “Banking 2.0,” Simple eschews brick-and-mortar stores in favor of an all-online format. that can be used like any other bank or ATM card. You manage everything on the website, and Simple ties in with your smartphone, providing notifications and alerts.
Simple has some competition among the online-only banks that lure customers with convenience and promises of limited fees. Examples include:
- Ally Bank
- ING Direct
- Connexus Credit Union
- Bank of Internet USA
While online-only banks are gaining in popularity, security remains a concern for many potential customers. Many online banks in addition to other security precautions such as quick time-outs.
Other customers simply prefer the option of face-to-face interaction and a personal relationship with bankers – something sacrificed with online banking.
Every consumer should weigh the benefits and drawbacks and then match their bank to their lifestyle. As a consumer, it’s crucial to appreciate that we’ve never before had more options.
You may have seen or heard of someone making a payment without ever pulling out a wallet. Mobile payment is still a nascent technology, .
With mobile payment, your phone essentially functions as your credit card. Your credit card payment details are stored on your phone (generally in an app), and retailers with accommodative software can accept payment as though your phone were a credit card. which explains why consumers are flocking to the technology.
Google is in the process of rolling out its own payment program, , which will allow Google users to send and receive money electronically.
Another innovation popular among small businesses are , which are typically plugged into a smartphone or tablet. These tools allow people to pay with a physical credit card, and the payee can receive payment without a traditional credit card reader.
And technology that allows Smartphone users to simply touch phones together in order to complete a transaction.
Finally, there are a number of mobile payment options available. PayPal is arguably the most popular, but has experienced and the called Serve. Each of these options allow users to tie in accounts (or, in some cases, use prepaid funds) to send money to other users.
Credit Card Microchips
Things may be changing, but all the payment methods you know and love to simply disappear.
While some experts are , similar to the way cash use has declined, credit card issuers are responding with evolving technology to keep pace with consumer expectations. This includes aesthetic elements , but it also has a lot to do with increased security.
Credit card microchip technology became ubiquitous in all major markets around the world before finally arriving in the U.S. in the last couple of years. These cards, known as “smart cards,” contain microchips with dynamic data storing capability that with much more rigor than the typical data stripe on standard credit cards.
Smart credit cards typically require input of a pin. That combination of the microchip and pin makes it so that, even if your card is stolen, the thief can’t use it unless he or she knows your pin. makes it much more difficult to duplicate your card.
Several U.S. card issuers have hopped on board the smart card train, including American Express, Bank of America, Chase, Citi, and U.S. Bank.
An additional bonus of becoming an early adopter of the smart card: it makes traveling abroad much easier, as many foreign establishments only accept microchip-embedded credit cards.
The Bottom Line
Innovations in payment technology are evolving faster than you can imagine. The best thing you can do is to stay ahead of the game by reading more about advancements in credit card and banking. And remember: not every technology is right for every consumer. Even the most “convenient” technologies are only convenient if they: a) fit your lifestyle, and b) are secure.
Still, it makes sense to be familiar with these advancements because, like it or not, and you’ll have little choice but to stay on the ride.