Plastic Cards vs. Smart phones
Let’s get to the point: plastic ID cards used for transactions are going to be around for a long time. Sure, smart phones are amazing. We’ve seen phones utilizing NFC technology buy sodas in ultra-tech environments. Just bump your phone and transfer personal data. It’s so cool and easy, why don’t we just do it, now, today!
Don’t get me wrong, the penetration of the transaction market via smart phones has only just begun, and its use as a percentage of the total market including cash, prepaid, credit card and other, will increase exponentially. However, the expanding transaction market will continue to drive plastic card growth as well. Of all things, the major credit card processors plan to push chip cards in the U.S., the last bastion of mag stripe cards in the developed world. The growth of plastic cards will grow at a decreasing rate, but not halt and decline.
The biggest issue is standards. NFC is touted as the logical choice for communicating securely from buyer through bank to seller. Unfortunately, NFC suffers from the constant jockeying between stakeholders concerning standards. Who gets the upper hand? The chip manufacturers, platform providers – Apple, Microsoft, Google – banks, and cell carriers all compete for technology that makes them relevant in the transaction space. Think Betamax vs. VHS and iPhone versus Android. Consumers love open systems and companies develop closed and proprietary systems. It’s an epic battle and who will win is uncertain.
Let’s talk reliability. We all need to know that our transaction will be fast, work flawlessly and work each and every time. Think about this fact: Why do you prefer to take a call on your desk phone versus your cell phone? Clarity and reliability are important.
Similarly, it’s nice to know that you have your ID card to make purchases, but also a credit card as a backup, right? Until we are confident that we will never need to carry our physical cards anymore, we’ll have them right there in our wallet. And it may be awhile before you can store your driver license in a mobile wallet.
The point here is that payment technologies don’t need to be mutually exclusive. It is okay to think of mobile payments as a companion or extension of card based payments, they’re not mortal enemies. The key to a successful mobile strategy will not merely be shifting the consumer action from swiping a card to tapping a phone – that does not move the needle very much. Instead, winning solutions will ‘amplify’ and enrich the consumer payment experience - before, during and after. That is where the power of mobile payments exists. It will be interesting to see how it unfolds – but it won’t happen overnight!
Cloud Services vs Software
While the exact emergence of a newer replacement technology for the plastic ID card is difficult to forecast in timing and in numbers, the infrastructure part of the technology is not so hard to forecast.
Cloud, or software as a service computing, is fast becoming the dominant business IT platform for and is evident in nearly every marketplace segment, including card processing. In fact, the VISA/MasterCard processing networks of yesterday can be looked at as a precursor to what we call the “cloud” today.
Centralized processing infrastructure and management resources create unparalleled efficiencies and economies of scale that banks and bank card processors have enjoyed for many years. Campus card issuers – colleges, universities and others - have historically not had access to such “multi-tenant” environments and therefore have been forced to purchase, implement and operate complex systems on a “one-to-one” basis. With the emergence of low cost cloud computing and professionally managed SaaS, the game is changing and schools have better options now than ever before when it comes to enterprise service delivery.
Traditional client-server campus card models will be relevant for possibly the next ten years. But I predict that the penetration of Web-based software for both ID carding and transaction systems, has only just begun. To stay on the leading edge of ID card technology in the future, seek out SaaS solutions before someone else SaaSes you back. And don’t forget your wallet.
About the AVISIAN Publishing Expert Panel
At the close of each year, AVISIAN Publishing’s editorial team selects a group of key leaders from various sectors of the ID technology market to serve as Expert Panelists. Each individual is asked to share their unique insight into what lies ahead. During the month of January, these panelist’s predictions are published daily at the appropriate title within the AVISIAN suite of ID technology publications: SecureIDNews, ContactlessNews, CR80News, NFCNews, DigitalIDNews, ThirdFactor, RFIDNews, EnterpriseIDNews, FinancialIDNews, GovernmentIDNews, HealthIDNews, FIPS201.com, IDNoticias es.