FIVE key trends in payment cards for 2023
The global digital payments market is now estimated to be worth more than the automotive manufacturing sector, and is expected to reach USD 20 trillion by 2026. According to virtual payment card provider Lanistar, this extraordinary growth of around 24 percent per year is being driven by a combination of technological innovation along with changing expectations and spending habits among consumers.
Jeremy Baber, CEO of Lanistar, said: “Today we are seeing an increase in demand for prepaid or eBanking debit payment cards worldwide. This change is being driven by the unbanked and underserved, as well as by younger generations, who are taking an active lifestyle choice to switch to this type of payment card We also see a number of key trends in the market that providers need to be aware of. In our way, while the payment card market is established and significant, there are still opportunities for expansion”.
#1 The emergence of new generations of consumers
The Millennial and Gen Z demographic groups are now well established and have significant purchasing power and economic impact. They are the two generations leading the charge in digital innovation, embracing digital and smart device payments and virtual cards. The combination of increased usage together with a wider choice of alternative payment cards makes financial services more accessible than ever before, and ‘democratises’ the process through technological innovation.
Baber continued, “In today’s increasingly digital society, where more people than ever before own a smartphone, consumers want and expect tailored financial products and services that can be accessed via a smart device. These services must be seamless and intuitive, while provide the services young people need. This is a generational expectation and failure to address it will have a negative effect on any payment provider’s business.”
#2 Reach the unbanked and underserved
“Across the Global South, and even in many developed countries as well, there are high levels of unbanked and underserved consumers, mainly from younger and lower income households,” Baber explained.
“Generally, these households choose prepaid payment cards or eBanking debit cards because they are affordable and secure, which makes them best positioned to meet their financial needs. But at the moment this is an underdeveloped market,” he continued. “These payment cards have become an integral part of everyday life for millions, and the people who use them are often open to exploring new features on their cards – at the right price. but only if they offer the right services at a reasonable price.”
# 3 The gig economy is changing payment habits
“The advent of the gig economy shows no signs of abating. And while the flexibility of contract work clearly benefits both workers and businesses, one of the biggest trends we’ve seen is the role of payment cards in ensuring contract workers are paid on time for their work. Whether it’s via a physical or virtual payment card or via a payment app, the gaming economy is driving a payment revolution in its own right, Baber said.
# 4 Apps and the mobile-first experience
Conservative estimates put the number of smartphones on the planet at seven billion, which equates to ownership by about 86 percent of the world’s population. Providing a user-friendly, seamless and intuitive mobile-first experience is a priority, including in the payment area.
Baber continued: “Consider Amazon, for example. This is a company that currently ships 1.6 million packages every day, and that’s partly because of how easy their mobile platform is to navigate and use. They stock just about any item a person might need, make all important information readily available, and rarely have any hidden costs. If this model could be imposed on a banking platform, imagine the success it could have”.
# 5 Balance transactions in the physical and virtual
While it’s likely we won’t see the end of physical transactions anytime soon, as technology continues to grow and evolve, so do the possibilities of virtual transactions. There are many advantages to digital solutions, but one that is particularly noteworthy is the reduction of plastic waste.
According to ABI Research, the amount of plastic used annually in the production of bank cards is equivalent to the amount of 80 Boeing 747 aircraft, with the carbon footprint of this production equivalent to 300,000 passengers flying from New York to Sydney. As an age group deeply concerned with environmental issues, Gen Z and Millennials will often find themselves looking for alternatives that negate environmental damage, and digital solutions are just one option.
Furthermore, effective payment solutions must balance speed, cost and security with user experience. Customers today demand “anywhere service” and payment providers must follow suit and ensure that their services are available where customers spend their time and money. The rapid development of technology means that the scope of “where” continues to expand from physical to virtual.
Baber concluded: “The real success of payments will not come from them being the focal point of our daily lives, but instead from them slipping into the background and providing invisible, embedded payment experiences. The ultimate goal must be that the user experience of payment cards and the apps they sits on becomes so deeply integrated with a person’s daily transactions that they end up not even being aware of it. In other words, payment providers should focus on developing and bringing to market payment solutions that are not only frictionless, but invisible.”
