Innovation gives payment cards a new lease of life

Nassir Ghrous, SVP, banking & payment for CISMEA region for Gemalto discusses why digital payments will not kill the humble EMV card

Tags: Gemalto NV (www.gemalto.com/index.html)
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Innovation gives payment cards a new lease of life At a time when threats of fraud and cyberattacks continue to grow, the security characteristics fundamental to banking cards will only become more important, Ghrous said.
By  Nassir Ghrous Published  June 3, 2018

While most attention appears to be focused on digital transformation of banks now, it is essential to remember the decisive role that EMV cards continue to play in our payment system. Even in an era dominated by smartphones and 24/7 connectivity, cards continue to be the most popular form of payment by far.

According to a recent Euromonitor International report, almost half (45%) of all sales transactions around the UAE were done through credit, debit and prepaid cards. This figure is expected to exceed 50% by 2020, with more and more consumers increasingly opting for cashless transactions.

When it comes to innovation, the payment card still has plenty of tricks up its sleeve. Over recent years, a whole range of promising solutions using payment cards have been introduced: with new designs and new options, the card appears to have been given a new lease of life, as witnessed by the recent launch of biometric cards. Thanks to an increasingly comprehensive range of products, the payment card is now an essential and effective marketing tool for banks, allowing them to optimize their customer portfolios.

Despite the incredible success of contactless transactions, in the eyes of banks and users, payment cards continue to be a relatively functional product. However, their intrinsic values should not be underestimated. Firstly, EMV cards enjoy a remarkable degree of consumer confidence. Unlike a mobile phone or any other connected device, a payment card is issued by the bank itself. Secondly, the end user can see the security chip integrated on the card and be completely confident that their funds are protected in the event of loss or theft. At a time when the threats of fraud and cyberattacks continue to grow, these fundamental characteristics will only become more important.

If we examine attitudes toward payment cards more closely, recent studies show that consumers are in fact very open, and even enthusiastic, about potential innovation. In fact, in the UAE alone, mobile payments are experiencing significant growth with the launch of new innovations like Samsung Pay, Emirates NBD Pay and Apple Pay. According to one of the leading banks in the UAE, Emirates NBD, contactless payments now exceed 10% of the bank’s total payments as compared to two per cent three years ago and digital transactions are increasing by 30% year on year.

Connections between the physical and digital can be seen in the recent launch of the biometric payment card in Cyprus, featuring a fingerprint sensor. As the user brings the card to the contactless payment terminal, they simply place their finger on the sensor to authenticate the transaction, which can also be carried out in contact mode. As a result, there is no upper limit when using contactless payments.

This solution therefore combines the two most powerful strengths of the current consumer environment: biometrics and contactless transactions. Real momentum therefore already exists for abandoning PIN codes and passwords in favour of biometrics. Not only are biometrics more practical for consumers tired of passwords, but they also allow irrefutable confirmation of the user's identity. What's more, this new type of card retains the option of switching back to use of a PIN code if necessary.

A recent survey released by Visa also revealed that the majority of UAE consumers prefer biometrics over traditional payment methods, reflecting increased consumer confidence in the technology. The survey showed that 98% of consumers in the UAE would like to use at least one method of biometrics to make future payments.

While nothing can stop the evolution of the banking sector towards a future dominated by digitisation, it does not, however, mean the end of the bank card. Thanks to the unique, tactile and personal connection offered by the card, the bank has a unique and effective marketing tool for strengthening the bond with its customers.

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