End of plastic cards may be near, experts say

Dubai: Experts have long talked about the eventual death of cash but we may soon see an obituary for plastic cards too.

Financial institutions are highlighting digital transactions “beyond plastic” as the future but the terminals and readers for contactless payments are still not widespread in GCC and the UAE for this trend to catch on, experts at the Cards and Payments Middle East conference said on Tuesday.

About 70 per cent of Generation Y will use more mobile banking than other channels by 2015 so facilitating digital transactions rather than decking up more branches is the order of the day, said Brett King, author of Bank 2.0.

Half of all bank customers will use mobiles for banking by 2016, he said.

For the finance industry this means that banking facilities and customer service should shift from a bank branch to their clients fingertips on mobiles and other digital platforms, King said.

Mobile banking can show customers how much they spend on eating out or groceries so they can have more control over their spending habits.

“It’s not just about shoving debit cards and bank websites on a smaller screen, it’s about changing our connection to money,” he said.

Customers can also avoid the queues at the coffee shop or restaurant by ordering and paying ahead.

This contactless payment methods through mobile phones uses NFC (near-field communications) technology allowing customers to use their smartphone like a card.

“It’s not just re-creating what we do with a card at a till,” said Ed McLaughlin, Chief Emerging Payments Officer at MasterCard.

“For consumers this means moving away from physical to digital devices into a world beyond plastic, where there is more information and it’s more secure,” McLaughlin said.

However, the infrastructure on the receiving end, such as terminals and readers, to support this technology in the GCC and UAE is still limited.

“There’s a big move to accept and adopt this,” McLaughlin said, citing Costa, Burger King, Chili’s, Noodle House as examples.

“We are working with government agencies, telecoms and financial institutions on this.”

Does this shift towards contactless payments mean the death of cards?

“NFC will not substitute cards. We had the same prediction for many implementations of cards. People welcome technology but some cultures want to touch and feel a physical product like a credit or loyalty card,” said Ayhan Yalcintas, chief executive of FutureCard, a UAE-based card manufacturer.

“NFC has been around for five years and that hasn’t changed the consumption of cards. You can embed many technologies on cards. Our generation will not see the end of cards,” he said.

FutureCard produces 400 million cards annually in its plant located in Sharjah Industrial Area and has deals with the RTA, Abu Dhabi Police Department and several UAE ministries.

“Plastic cards are dumb, they don’t give feedback except that the payment is approved or declined,” King said.