Are We Moving Toward a Card Free World?

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Recently in DX Weekly, we’ve been taking a look back at digital trends in different industries from the last year, and comparing them to previous years.

In this edition, I want us to take a closer look at digital payment trends, and see how it’s going to shape the customer landscape in the coming years.?

Contactless payment in the form of “touch to pay cards and fobs were introduced in 2004 and have been on the rise since.?Phone based payment technologies based on NFC chips were introduced 10 years later and have also becoming increasingly popular.

Contactless has passed a point of critical mass and may lead to the extinction of some more traditional forms of payment in the coming years.

Why do I say that?

More and More Retailers are Accepting Contactless

There has been a consistent increase in the number of retailers that are now accepting contactless payments.

In 2021, there was an increase of over 60% in the number of retailers accepting contactless payments. This brings the total up to 67% of US retailers compared to the 40% in 2019.

Contactless payments include both phone-based and “tap to pay” methods of payment made with chip-enabled credit cards, and in fact most of these upgraded "contactless" POS terminals do support phone-based payments such as Apple Pay. A 2021 study by Fit Small Business, showed that 56% of all retailers were accepting some sort of phone-based payment at their POS terminals.

Consumer Use Continues to Grow

It's not only that a majority of retailers now accept phone-based payments, 36% of the US consumers reported that they used some form of mobile device-based payment system during 2021. As the cost of smartphones continues to decrease (at the low end) and as the tender is accepted even more widely as noted above adoption should continue to rise

Peer-to-peer payment platforms are growing at an accelerated pace:

It's not just retail payments that are driving the shift to phone-based transactions. The amount of money moving through Venmo, a leading peer-to-peer payment platform, has been growing dramatically. As an example, almost $60 billion moved through the Venmo platform just during Q2 of 2021, roughly a 57% growth over the same quarter the prior year.

Are we moving towards a card-free world? Only time will tell, but I see the marginalization of physical credit cards in the next ten years. Credit card accounts won't be going away, but the physical card will be, as they will be replaced by smartphones or wearable technology. At that point will we still call them credit “cards?”

By the way, I think we will see the same for many of the other cards people carry such as drivers license and insurance cards as well. I wouldn’t want to be a wallet manufacturer in 2032!

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Your Turn

What do you think? Are cards going away? Or am I wrong? And either way what should businesses do to prepare for the future? Let me know in the comments.

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Howard Tiersky is the founder of FROM, The Digital Transformation Agency where he works with leading brands on Digital Transformation. Check out his Wall Street Journal Bestselling book, Winning Digital Customers: The Antidote to Irrelevance.