Credit cards are a popular payment mode used by billions of people worldwide. As a matter of fact, the number of credit card users keeps growing. According to Clearly Payments, credit card holders globally are currently at 1.25 billion. It is a steady rise from 1.1 billion users in 2018.
Some major players in the credit card industry include banks and credit card companies. However, the current landscape of credit card issuing is rapidly changing, and several technological advancements are improving the industry. Let us take you through the latest tech innovations shaping the future of credit cards.
What Are Credit Cards?
They are payment cards issued by financial institutions that allow you to buy goods or services on credit. Not only that, but you can also use a credit card to withdraw cash. You build a continuing debt balance to pay back later with interest.
However, the issuing institution gives you a credit limit that you can’t exceed. Another good thing about credit cards is that they offer rewards on your purchases. You receive points, cashback, or miles.
Regulations For Credit Cards
Credit card issuing is regulated by the Federal Reserve. It does it to protect both the financial institution and the user. The regulations save both parties from being exploited by the other, and some of them include:
- The credit company has to notify you 45 days before increasing your interest rate and when changing certain fees and terms of the card. Moreover, it should give you an option to cancel the card if you don’t agree with the changes.
- You have to pay your balance every month. Failure to do so or making a minimum payment accrues interest. The monthly credit card bill includes all information about how much you have to pay and for how long.
- The financial institution doesn’t have to increase interest rates for the first year. But if you don’t make payments on time as agreed, they can go up.
- You should first inform your credit card company before going for over-the-limit transactions. The institution may allow the transaction or turn it down.
- Persons under 21 years old have to prove they will be able to make payments. Or get a cosigner to open a credit card account.
- Your payment date should be the same every month. Also, the credit card company must bill you 21 days before the due date.
The Latest Tech Innovations Changing the Credit Cards Industry
1. Digital Wallets
A digital wallet is an electronic device, online service, or software that enables you to transact electronically. It is also known as an e-wallet, and you can carry it on your smartphone or use it on your desktop. You only have to download the app created by a financial institution to use the service.
Some include Google Pay, Paypal One Touch, and Apple Pay. Many people are embracing digital wallets for quick and simple payments. They eliminate the need for physical credit cards for transactions.
Whether you want to pay for foodstuffs, clothes, movies, or engage in gaming activities, such as online casinos, you can use digital wallets — in fact, for the iGaming sector they’ll even allow users to exchange it for real money, as platforms have e-wallets available for both deposits and withdrawals.
2. ACH Transactions
It is another payment option growing in popularity today. Automated Clearing House is a network that enables the movement of money electronically between bank accounts. People and businesses use it in many ways, including:
- Paying bills online
- Tax payments
- Releasing Social Security benefits
ACH transactions are available in two forms. ACH debits, which are common for auto-bill payments and ACH credits used in payroll. They are substituting many credit card payments for various businesses and people.
3. Virtual Credit Card Payments
Virtual credit cards are the digital versions of the physical cards. In fact, a virtual credit card generates a unique number to use for payments instead of the physical card number. It is more secure because it prevents the merchant from keeping your credit card information.
For security purposes, virtual credit cards are taking over physical cards. This is because they offer an additional layer of security to your financial data. You can make online purchases securely without fear of the increasing cyber-attacks.
4. New Hardware Solutions
The payment environment is changing with the development of new banking options. New hardware solutions are introduced to handle contactless payments. For example, card readers take a few seconds to verify connections with e-wallets or contactless cards. The process is supported by near-field communication (NFC).
Good enough, they use advanced tokenization and encryption technologies to reduce fraud. You don’t have to physically insert your card or enter a PIN, which keeps your financial data safe.
5. Crypto Credit Cards
Many financial service companies are issuing crypto credit cards. It is one of their top strategies to attract crypto fans. The card works the same way as the traditional credit card, with slight differences. First, you use cryptocurrency for your purchases with crypto credit cards instead of cash.
Additionally, their rewards are in cryptocurrency. Some popular crypto credit cards include Venmo credit card, BlockFi credit card, and Brex Business card. However, before applying for one, there are important things you need to look at, such as:
- Rewards on the crypto card.
- Cryptocurrencies supported by the card.
- Various limitations because the cards are not available to everyone.
Credit Cards Are Still Popular
Despite the introduction of many new digital payment solutions, credit cards are still popular. They offer better credit, making them darling to many people. So, tech innovations are just improving the service, especially with the introduction of virtual credit cards and contactless payments.