Now that the payments landscape is abundant with innovative digital solutions that require nothing but a smart device at hand to make a purchase, many begin to wonder: are debit and credit cards becoming outdated?
In this overview, we attempt to answer this critical question by analyzing current industry trends, consumer preferences, and forecasts made by analytics and experts. Keep reading to form an opinion on whether bank cards will maintain relevance in the foreseeable future!
Why Is the Future of Bank Cards Under Question?
Bank cards have become an integral part of people’s everyday lives. It is estimated that by the end of 2023, there will be over
29 billion debit, credit, and prepaid cards worldwide. However, lately, the center-stage position of this payment method is being questioned by many - some of the main reasons behind it include:
The rapidly growing popularity of digital payments. The COVID-19 pandemic has highlighted the importance of alternative payment options in the modern world. As a result, innovative contactless methods like digital wallets, QR codes, and P2P payment apps gained prominence.
Cards’ susceptibility to fraud. Despite advancements in security features, traditional bank cards are still susceptible to fraud and unauthorized transactions. They also face a risk of being lost or stolen.
Sustainability concerns. The environmental impact of producing and disposing of plastic cards is a growing concern. As sustainability becomes a key focus globally, more and more card issuers are facing pressure to optimize their processes. For instance, Mastercard is already working on removing first–use PVC plastics from its cards by
Changing consumer behavior. Consumer preferences and behavior shift all the time. It is particularly noticeable when it comes to the choices made by younger generations. For instance, most
Gen Zers prefer BNPL services over conventional credit cards due to their convenience, flexibility, and additional features.
Moreover, tech progress is never stagnant, so new and exciting payment solutions keep emerging all the time. These technologies may offer features like decentralization, enhanced transparency, and lower transaction costs, which may result in them becoming the preferred alternatives to traditional payment options like cash and bank cards.
Bank Cards’ Key Competitors in the Modern Payments Landscape
As you may have guessed, the speculations regarding the debit and credit cards’ gradual loss of relevance come hand-in-hand with forecasts on which payment methods have the potential to replace them.
Some of the most promising alternatives are as follows:
Digital wallets. E-wallets are secure, convenient, and user-friendly payment options that are widely accepted across the globe. There are over
2.8 billion digital wallets in use today, accounting for nearly half of the world’s eCommerce transactions.
Biometric payments. Biometric payments identify users by analyzing their unique physical traits, such as fingerprints, iris scans, or facial features. Thus, this option provides a high level of security without compromising on payment speed and convenience.
Voice-enabled purchases. While there are still plenty of advancements required for voice payments to reach their full potential, they offer a promising alternative to bank cards due to their convenience and hands-free usage.
Wearable devices. There are currently more than 219 million smartwatch devices worldwide, many of which are NFC-enabled and allow users to make payments easily and securely. With nearly 180 million more smartwatches expected to be delivered to consumers in 2024, it is clear to see why payments via wearable devices are set to gain more popularity.
What’s more, many industry experts agree that Central Bank Digital Currencies (CBDCs) are also gaining attention as potential replacements for traditional debit and credit cards.
Does the Emergence of New Payment Methods Mean the End for Cards?
As you can see, there are plenty of reasons for debit and credit cards to become a thing of the past, as well as a plethora of emerging innovative solutions to take the lead instead. Due to these factors, we are witnessing the relevance of these seemingly outdated payment options becoming a hot topic.
According to Megan Bramlette, Director of North America & EU Payment Acceptance at Amazon, for bank payments to take flight, the customer experience will need to be significantly better than the one currently offered by cards.
While all these notions are true, it is safe to say that bank cards will not be going anywhere in the near future. This is mainly due to the fact that no other modern payment method currently beats their adoption level, connectivity, and acceptance. After all,
76% of consumers have at least one credit card. Besides, the global credit card industry is expected to grow to $107.69 billion by 2025.
Therefore, while credit and debit cards are no longer an absolute necessity in offline and online purchases, they remain an integral part of the payments landscape. In the foreseeable future, we are likely to see them evolve and find a way to co-exist as one of the many payment alternatives available in the market.
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