We live in a digital age, and yet all our online and over the phone payments are carried out based on a very non-digital technology – payment cards. Essentially cards are protected by you needing to know a few numbers off the face of the card, and 3 additional security numbers on the back. If you aren’t the only one who knows those numbers, then you aren’t the only one limited to spending on that card. Yes, there are many new security measures online, such as 3d secure and verified by blah, and yes, there are endless reams of PCI compliancy rules that businesses should follow. But at the end of the day, a bunch of numbers is hardly the easiest thing to secure.
The end of cards?
Cards have served us well for a long time now. But the cost of issuing a piece of plastic with some numbers on, isn’t cheap (on such a large scale). The costs of trying to protect those numbers for banks and mainly businesses are always on the increase, and this always results on businesses being charged more to accept a card based payment. What’s worse is, that when that card isn’t physically present, such as online or over the phone (especially when online sales are increasing) the poor old merchant is charged even more for the pleasure of accepting their customer’s payment.
What we must remember is that fraud doesn’t cost your issuing bank much at all. Rather it is the merchant who sold the goods that loses out financially, and they will lose out on the value of whatever they sold. For small businesses that’s quite a risk, especially when they branch out onto the web. I have known many small businesses to be stung like this, loosing thousands in revenue and of course lost product (a double hit for them).
Now we have a number of alternative payment systems and services starting to become available, some in the form of virtual currencies, mobile payments, different payment schemes and processes online (ala PayPal) and these are starting to become quite disruptive to the traditional card schemes and banking business. With alternative payment options growing in popularity, could this possible be the beginning of the end of the card? I say the beginning, as cards are heavily entrenched in our daily lives, and to date, only Starbucks IMHO has shown that consumers and businesses are starting to really make a choice when making a payment – and opting for something other than their card.
Digital payments for a digital age
I am a strong believer that when the technology landscape changes drastically, you need to embrace it fully. When cards were first becoming popular, there was no internet, no over the phone payments nor over the phone banking. But the internet is here, and cards haven’t changed at all. The infrastructure hasn’t changed, all that has changed is that software developers let us type in our card details so that the card can be identified. Not much evolution or embracing of the new digital age there.
Payment schemes need to be designed with their current landscape in mind, payments need to be designed for the digital world, which with mobile devices now blends seamlessly at times into the real world. This is what we have done at CloudZync. We have designed a payment scheme for the digital world that can be used online and out there in the real world, day to day via your personal mobile device.
For me, this is just the beginning of looking at how we transact, how commerce takes place, how customer relationships are forged in the real and digital worlds, and it’s an exciting time to be in this space. CloudZync is pushing the boundaries of what we expect from financial products, commerce, customer relationships and in terms of technology making our lives easier. Technology making my life easier and safer as a consumer, and the same applies to businesses. Technology making sales, transactions, experiences and relationships easier to manage and more profitable. To achieve these goals, we must always challenge what has gone before and that includes cards and banks…