Debit Cards Are About to Go High-Tech
Financial technology might not be as flashy as the latest IoT device, but it’s every bit as important. Given that consumer spending represents
70% of the U.S. economy, Americans need convenient, secure spending technology.
The good news is, card issuers have been working on a slew of exciting new features. While many of these upgrades aren’t yet available to the average cardholder, they may be by the time you get your next debit card:
1. On/Off Switch
When a card is lost or stolen, it needs to be disabled as soon as possible. Although consumers are somewhat protected against unauthorized charges, identity theft and credit reporting issues can take years to sort out.
To make it easier for cardholders to freeze their card, issuers like Discover and Wells Fargo have debuted an on/off switch. By connecting the card with an app, it can be enabled and disabled at the touch of a button. Expect this feature to become standard within one to two years.
2. Automatic Savings
Savings automation is available on select
debit cards, such as the one offered by banking app Chime. By rounding purchases up to the next dollar and depositing the difference in a linked savings account, this system helps cardholders sock away spare change with every purchase.
In the future, debit cards may allow savings to be put toward other needs. Many Millennials could use help paying down their student loan balances. Parents might use the feature to build their kid’s college fund, while homeowners may want help chipping away at their mortgage. In theory, this model could be applied to any financial goal.
3. Universal Card
These days, the typical American
carries four credit cards. Not only is that a lot to keep track of, but it’s wasteful. Cards need to be replaced every few years, adding up to a lot of plastic in landfills.
With so many cards in circulation, multiple issuers have invested in developing a
universal credit card. The concept behind these cards is that a single app could be used to manage multiple cards, prompting the user to choose for each transaction which card they want to pay with. Expect the same thinking to soon be applied to debit cards.
What if a universal card is lost or stolen? Because it’s app-based, losing it is tougher than a physical card. And even if a universal cardholder’s phone is misplaced, the card can be shut off from a different device.
4. Crypto-Card
After years of hype, cryptocurrencies are finally making their way to credit and debit cards.
An early contender is the MCO Visa card, which is crypto-linked but can’t directly spend cryptocurrencies. Cardholders can’t load digital currencies directly onto their card, and cryptocurrencies are converted to U.S. dollars immediately prior to purchase.
Watch for crypto-cards to become more popular. Governments will relax regulatory hurdles in order to increase spending. Over time, cryptocurrency markets will become less volatile and consumers will become more comfortable using non-fiat currencies.
5. Two-Factor Authentication
Another security feature just starting to appear on cards is two-factor authorization. This is commonly used for digital logins, sending a text message or an email with a temporary code whenever a login attempt is made. Because the user must have both the password and the device in his or her possession, two-factor authorization makes it tougher for fraudsters to use the card.
Two-factor authorization is, admittedly, less convenient than the typical PIN- or password-only method of authorization. With that said, it’s a lot less cumbersome than dealing with fraudulent transactions after they’ve been made.
6. Credit Card-Like Rewards
Credit cards have featured cashback and point-based rewards systems for years. But until recently, debit cards have been mostly no-rewards tools for withdrawing funds from your checking account. In fact, a 2019 survey shows that
65% of credit unions don’t offer any sort of debit card rewards program.
For debit cards to remain a competitive and viable option for consumers, banks will have to start offering some sort of rewards program. It doesn’t have to be much: Even ATM reimbursements or airport lounge access would go a long way in today’s market.
7. Real-Time Displays
Wouldn’t you love to see your balance without checking your banking app? The debit cards of the future will have smart screens that can give you key information, such as total balance and recent purchases made.
Issuers will have to think carefully about how to keep this information secure. A PIN, or possibly a fingerprint, will be required to view it. Otherwise, high-balance cards could become targets for theft.
8. Home Scanners
In the future, card companies may offer home scanners. A pizza delivery is a prime example of how this could work. When the pie arrives, the homeowner’s account is charged automatically.
Not only would that be convenient, but it would guard against fraud by ensuring the purchase results in an actual delivery. Plus, the resident wouldn’t need to make any contact with the driver, reducing the risk of disease transmission and robbery.
9. Biometric Cards
What if you didn’t need to carry your wallet when you visited a foreign country? As technology improves, debit card issuers could use biometric technology to make payment methods more discreet.
Imagine putting in a contact before you headed to the airport. Rather than carrying a wallet, you’d simply look at the payment terminal to make a purchase. Perhaps a temporary tattoo issued by your card company could function much like a QR code: Hidden under a shirt sleeve, the unique print could be swiped across a terminal when it’s time to check out.
The future of technology is exciting, and debit cards are due for some upgrades. Think about the features you’d like to see in yours, and ask your card issuer: They just might have what you want in the works. If not, they may have you to thank for coming up with the next great card concept.
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