How The Cards Business Is Transforming
Rethink How Cards Are OfferedAleia Van Dyke
Analyst in Payments, Javelin Strategy & Research
We're seeing several key trends. First is widespread digitization of payments. Most traditional task-based, cash-based payments are falling by the wayside, while there's a proliferation of electronic payments. We are also seeing an increase in the use of prepaid and mobile, which is dramatically changing the payments and cards space.
The industry as a whole is challenged by new and constantly changing regulations, and card issuers know they'll be challenged by future regulations as well. We also see that many banks today have to re-evaluate their card-issuing strategies, whether evaluating the fee structures for certain types of cards, whether or not they even want to offer certain cards, or whether they only want to offer certain cards to a specific customer segment.
The industry is changing rapidly, and so is the way banks will compete in the future. Today we see many new competitors in this space, which is becoming worrisome for banks and card issuers. When we think of payments, we no longer simply think of traditional credit card companies; we're starting to think of nontraditional players such as Google and Apple that we wouldn't have associated with the payments space 10 to 15 years ago. We're seeing more partnerships, and we'll see more banks change the way they offer cards so that they're not just offering a single product.