The payments card market doesn’t stand still. As we move towards the Instant Economy, where consumers expect everything to happen in real-time, payment card issuers are racing to deliver faster and more streamlined services to customers.
The over-arching theme we’re seeing in card payments is an expansion of the traditional ecosystem. Partnerships are emerging between incumbents and relatively new entrants, driving innovation on a scale we’ve never seen before. There’s also a growing focus on security, as consumers become more conscious of data privacy issues as the cyber threat landscape evolves.
Here are some of the specific trends we’re seeing in 2021:
New principal memberships
Previously, if a business wanted to issue cards it would have to go to a BIN sponsor that would provide access to Visa. But now, Visa is providing principal memberships to non-bank financial institutions, levelling the playing field and helping to drive innovation. For example, Modulr recently became a Visa principal member, giving us the ability to issue Visa products directly. This will help us deliver faster and increasingly frictionless full payment capabilities to our customers.
The rise of crypto cards
Coinbase also became a Visa principal member this year – the cryptocurrency exchange platform has been working with Visa since 2019 when it launched the Coinbase Card, allowing customers to spend cryptocurrency as easily as they would spend cash from their bank account. This partnership might have seemed unlikely just a few years ago, and it shows how quickly the ecosystem is expanding as cryptocurrency becomes mainstream.
Stronger focus on fraud prevention
In 2018, 55% of businesses said that online card fraud was an increasing problem for them as a business. This is a problem that industry regulators have been working hard to address. Under PSD2, Strong Customer Authentication (SCA) must be applied to all electronic payments within the EEA. SCA requires three factors: something the customer ‘knows’, something they ‘have’ and something they ‘are’. Visa has already launched 3D-Secure (3DS) v2.0 to help meet this requirement and we expect to see further updates in this area, as the UK deadline for SCA enforcement is March 2021.
Virtual cards for consumers
Virtual cards have been used by businesses to pay suppliers for many years and this has now entered the mainstream for consumers as well. For example, challenger bank Revolut now offers its premium customers the option of creating disposable virtual cards for one-off transactions. This can help to protect customers from fraud. Customers can also use these cards to make one-off subscription purchases and stop further charges from being incurred.
The future of card innovation beyond 2021
From the effects felt by SCA to the consumer applications of virtual cards, 2020 has been a pivotal year for card services. And the conditions imposed on business and the economy by COVID-19, it has forced the industry to rethink the card ecosystem.
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