In 1991 I had to learn the difference between million dollar transactions and hundred dollar transactions. As I came to explain, when telling my life story, mt shift from 100 transactions at a million to 1,000,000 for a hundred. This transition took me from capital markets to payment cards.
Today, I wonder about the future of the ID-1 based payment card? A piece of plastic 3 3/8 x 2 1/8 with rounded corners.
In another blog I spoke of how this ID-1 object became a token responsible to act as the first factor, something you have. Printed, encoded and embossed characteristics were the security features. Today, with EMV as the global standard for payment CARD security; cryptography and the “secure element” replace those physical security with digitally mastered circuitry embedded inside something capable of protecting those secrets cryptography requires. We digitized the payment card. What we now must do is shift our vocabulary to tokens and credentials.
We need to embrace a new way of speaking we need to think about our “Payment Credentials”.
Today, we now tap our phone to pay, we use our phone to browse the internet, we shop & book tickets with apps and we listen to music & watch movies all from this device we apparently use, thousands of times a day. For those of us who remember computers that filled floors, we now are capable of buying more powerful computers, similar in size to those same cards. Think about the Raspberry Pi, a computer almost as small as a card, not quite! Yet!
The embedded secure element integrated inside our payment cards are being integrated into phones, bracelets, rings and things. The question; will they replace the card we are now comfortable with? Yes – maybe? Will we embrace these objects as the new carriers of our payment credentials? Many hope so.
In oder to think about the probability of cards disappearing, one must begin by think about the number of cards now in circulation. In round numbers we can think about 1.2 billion debit and credit cards, 300 million prepaid cards and 300 million retail branded cards. In round numbers, 1.8 billion payment cards. We next must think about our population and how many people now carry cards – 115 million households and 242 million Americans over the age of 16, according to a recent census. We now has a numerator and a set of denominators.
The question then becomes, how many payment cards does an American want to carry and how many payment credentials will an American end up having.
I would argue a debit card and a credit card is all we need to carry in our leather wallet, purse or pockets. Those other payment credentials can easily be accessed from wallets in the cloud or in our digital objects.
Merchants can integrate payment capabilities and focus on factoring their consumer receivables, behind relationships designed to service, thrill and sell. In an App and API enables economy, cards become a burden as the experience becomes the essential component of our lives.