Far from losing their relevance, cards should be at the heart of any bank’s payment strategy.
Amid all the hype about a digital future in which consumers transact instantly between their accounts using digital wallets, it can be easy to lose sight of the present – and, indeed, what’s going to happen next. While there’s no doubt that the longer-term future of payments is digital, that doesn’t mean cards won’t feature in that mix – and based on current evidence, they are more popular than ever.
In a new white paper, we argue that payment cards are more popular than ever coming out of the pandemic – and that banks must include them as a key part of their payments strategy for the next five to ten years. For instance, PCM’s Digital and Card Payments Yearbooks 2022-20231 show that card use grew above trend across Europe last year. The number of European cards in circulation grew by 20% more than the long term average, at 5.18%, while spending on cards shot up by 17.64% – almost twice the long-term average. What’s more, cards still constitute 57.3% of all cashless payments on average across 33 countries in Europe, with credit transfers and direct debit payments responsible for a majority of the remainder.
In our new paper, “Card use keeps growing – the strategic implications” we examine why cards remain so popular with consumers – and what it means for banks. Sources vary in their exact percentages, but research undertaken for the European Central Bank in late 20222 suggests that 55% of consumers in the euro area prefer to pay by card, while research for Visa from a year earlier3 says 65% of US consumers are most comfortable with contactless card transactions coming out of the pandemic. There may be a number of reasons for this preference, not least consumer’s familiarity with the card as a payment instrument during the challenging times we’ve experienced, as well as the convenience of paying with a contactless card.
What’s beyond dispute is that contactless card payments have accelerated usage over the last five years, while new multi-function cards that combine debit and/or credit functions with loyalty, buy-now-pay-later and other products have enhanced the card’s utility. Finally, new security features, from biometric cards through to 3DS2 on the acquiring side have all helped to shore up the security and comfort users have with card use.