The days of the plastic payment card are surely numbered. Although they represent only a small fraction of a percentage of all plastic items produced in the world, several billions are still emitted each year.
But environmental concerns mean that plastic cards – which are technically made from polyvinyl chloride, better known as PVC – are becoming unpopular with consumers. They are also expensive to issue, costing around $7 each. That’s why we’re starting to see alternatives hitting the market, including cards made from PLA (polylactic acid), wood, metal, recycled PVC, and even cards made from recycled plastic collected from coastal areas.
While it’s great to see so many financial institutions signing on to the UN Principles for Responsible Banking, we also have to recognize that many of them are also using their eco-cards to grab the attention of potential customers. But I would argue that fintechs that want to secure a solid future in a world where plastic payment cards have gone to bed have to go much further than that.
Why use physical cards?
Advances in payments technology and infrastructure mean that many of us no longer need to use physical cards, regardless of what material they are made of. We simply use our smartphones or wearable devices, activate Apple Pay or Google Pay or Samsung Pay in seconds, complete our purchase, and get on our way.
The growth of so-called “tokenized” payment solutions, which allow users to make card payments without using the card itself, has undoubtedly been driven by consumer demand. Many people don’t want to take their wallet or purse with them, so they ask for digital wallets instead. These wallets live in our smartphones, alongside all the other essential services we need to access on a daily basis: cards, internet, email, messaging services, etc. As the Wall Street Journal put it last year: “Wallets are over. Your phone is everything to you now.
In some cases, we don’t even need our phone and can use a wearable device such as a fitness tracker, ring or watch to make the payment. It is an incredibly simple and convenient process for the consumer; however, this means that the financial services provider that issued the card has somewhat disappeared. Cards – especially those that are metal or with a custom card face – are considered a status symbol, although they are not so easy to flash on a phone screen.
But for banking brands that want to make sure they stay top of mind with their customers, the actual cards they issue are something they can use as a key differentiator. The color, the feel of the card, the logos it bears matter. That’s why I think that while *plastic* payment cards will become a secondary payment choice, physical cards of some description will still be present.
But in my opinion, it’s not the composition of the board – PVC, bamboo, titanium or thin air – that matters. That’s what the map represents. And while issuing payment cards made from sustainable materials is a great way to display your green credentials, financial service providers who really want to stand out and create market-leading banking services for customers need to go much further.
Going back to the point I made above about logos, fintechs that really want to get ahead of their competition should consider creating a next-level card service tier for customers, bearing the unique Mastercard World logos. Elite or Visa Infinite or Platinum.
To work with Visa and Mastercard at a premium level, players will obviously need to meet certain criteria in terms of licensing and accreditation, and have existing relationships with the right financial and technology organizations. They will need to consider tokenizing their card program and will need to implement insurance and unique value-added services. Partnerships with companies that have direct experience of working directly with card schemes on the development of premium level services would be a distinct advantage.
But if they want to get those logos on their cards, there’s still a long way to go. Tangible, value-added services are the key to getting noticed by Mastercard and Visa and accessing these premium brands. Again, it is the partnerships that these organizations have that will count; partnerships with essential service providers for high-end banking customers.
In summary: true banking innovators have a bright future
Ultimately, financial institutions have a huge opportunity to gain competitive advantage by creating truly “premium” services. To be true innovators, players need to have more than just a green payment card and think about which features and services will have real consumer appeal. By developing a solid network of partners who give them access to these services, they have a good chance of being able to use the Mastercard World Elite or Visa Infinite or Platinum brands on their payment cards, whatever their composition. .