Credit cards to become obsolete as e-payments reign — FICO
THICK WALLETS will soon become things of the past as physical credit cards may begin to be obsolete in 2018 with digital payment schemes continually emerging, an analytics software firm predicted.
In a blog shared to reporters via e-mail on Friday, Fair Isaac Corp. (FICO) said consumers’ wallets “will definitely become slimmer” as physical credit cards are replaced with payment applications on smartphones.
“2018 will be the beginning of the end for physical credit cards. However, their functionality will become even more omnipresent in our lives as more cards migrate to consumers’ mobile phones,” TJ Horan, FICO vice president of product management, said in his post.
As banks migrate their services from physical cards to mobile apps, Mr. Horan noted that: “we will never dip our EMV (Europay Mastercard Visa) chip cards as much as we used to swipe our old magnetic stripe cards.”
He added that more retailers are shifting rewards programs to digital channels, veering away from the traditional cards.
In the Philippines, however, consumer awareness and adoption of digital payment systems are low compared to other Asian countries.
In a report by e-payment firm Paypal Pte Ltd. in October, consumer awareness of digital payments in the Philippines is the worst out of the seven Asian markets surveyed, with 35% of consumers aware of e-payments and with only 22% actually using such services.
Meanwhile, consumer adoption of e-payment schemes in the Philippines stood at 33%, only besting India’s 28%.
Globe Telecom, Inc.’s G-Cash and PLDT, Inc.’s PayMaya are the most popular form of e-money services in the Philippines, according to the central bank.
Meanwhile, FICO’s Mr. Horan noted that in 2018, retailers will also start to adopt the use of EMV chips as well as e-payment schemes since consumers are becoming more wary of the risks of using magnetic stripe cards.
“If we do have to use a mag stripe card at a retailer that doesn’t accept mobile payments or chip cards, an alarm will go off in our heads as we recognize the potential security exposure. Retailers that don’t offer modern, secure payment choices will lose sales,” he said.
The Bangko Sentral ng Pilipinas has ordered local banks to phase out magnetic cards and shift to EMV chip-embedded cards until June next year. — K.A.N. Vidal
