Credit Cards Reinvented

 Right now, the credit cards business is a fascinating place to be in. Let’s imagine if, Chase has teamed up with a number of airlines to establish co-branded credit cards that provide new users with a special welcome bonus that is redeemable on their next foreign journey. SBI, India's largest public sector bank, has teamed with Fabindia, a lifestyle brand, to provide a co-branded, contactless credit card to premium clients. Another major Indian private bank, ICICI Bank, has partnered with Amazon Pay to develop a contactless card that has already attracted two million users. The banking and financial services industry is changing at a breakneck rate, and the credit cards industry is no exception. Customers are moving away from cash, and new digital payment models are emerging, therefore the credit card industry must reinvent itself to stay competitive.

The concept of buying and selling with the help of worthless instruments dates back to the dawn of human civilization. Since then, the concept of purchasing on credit with a represented transactional item has gone through several iterations, culminating in the 1950s Diners Club Card, the actual forerunner of today's credit card. Credit cards developed to become a USD 100 billion market by 2020, with over 80% of customers preferring cards over cash, thanks to the banking sector's swift response. However, after decades of operations, credit card issuers and banks must now re-evaluate their approach in light of the present market environment.

Changing customer behavior and tastes are now driving the market. Customers are increasingly turning to new digital payment alternatives in place of cash. By 2016, contactless payment alternatives were available on 95 percent of Canadian credit cards, and 75 percent of shops had created the ability to accept contactless payments. In China, smartphone applications accounted for 83 percent of all payments in 2018.  Then there was 2020, the year when everything began to shift. Payments changed at a breakneck pace as the COVID-19 outbreak struck devastation throughout the world. According to Mastercard, 79 percent of customers worldwide utilized contactless payments in 2020, and 74% want to continue using these payment methods even after the pandemic.

Customers today anticipate a high level of personalization and autonomy over their banking operations, including their credit card usage, in addition to contactless payments. They want convenience, flexibility, and, most importantly, a smooth and relevant credit card experience. They have a lot of options as well. Customers today have a plethora of alternatives when it comes to how they purchase and handle their money, from digital wallets to the growing Buy Now Pay Later service.

Fintechs are also getting into the game with innovative new products like BlockFi's upcoming Bitcoin Rewards Credit Card. To keep their competitive edge in this industry, credit card issuers must step up their game. Of course, contactless payments are already and will continue to be a fact of life for the foreseeable future. As wearables become more mainstream, this is a field that will see a lot of innovation. Established players such as Fitbit and Apple Watch have already begun to provide payment options. Fintech start-ups in the region are also working on wearable and app-based payment methods. Amazon and other tech companies are providing payment capabilities through its smart home assistants, and biometric authentication-based payment systems are gaining traction.

Established credit card issuers and banks have a huge competitive edge over newcomers. They are already familiar with their clients. Now is the time to evaluate customer data in order to better understand their preferences and needs so that tailored services and rewards can be provided. If a frequent traveller uses his card to plan a family vacation, for example, it would be a good idea to provide him with a list of unique leisure activities available at the site, such as whale watching in New Zealand or breakfast with a Disney princess at Disneyworld. For example, allowing clients to pay for taxi tickets using collected reward points or a mix of reward points and credit cards would usually be appreciated for a modern customer for its personalized attention.  Giving the customer some power over incentives and loyalty programmes is another great way to ensure customer satisfaction and loyalty. Credit card companies can offer not only a superior experience for their customers but also ensure the autonomy they desire over their financial transactions by extending rewards programmes to a choice of possibilities for them  to pick from.

The credit card business, like the wider banking and financial services sector, is undergoing substantial change and must act rapidly to take advantage of current market possibilities. There will undoubtedly be many fascinating collaborations and ideas as fintechs and technology giants establish themselves in the market, offering clients a whole new way of buying and managing their finances. The future of credit cards is exciting, and the world is anticipating the next major breakthrough.