CARD PAYMENTS

Will digital wallets and payment cards replace plastic ? The obvious question , then , is whether emerging payment methods will replace the old-fashioned way of paying for goods . “ Technologies such as digital wallets , virtual cards and embedded finance are already replacing cards ,” proclaims Pat Phelan , Managing Director UK & I at GoCardless .

“ You don ’ t need to look far to see it happening – walk onto public transport and see people tap and go with their phones at the barriers , or use their device to pay for dinner at a restaurant . It ’ s only a matter of time before plastic cards are redundant . However , current payment options are mostly still linked to a physical payment card , even if that card never leaves the wallet . It ’ s likely this will change too , particularly if and when these digital wallets become linked directly to a user ’ s bank account or other payment methods , leaving the payment card fully behind .”

However , not everybody is so convinced . Some observers believe there is room for plastic in a digital economy , even if in small quantities . “ Digital technologies may one day replace physical cards , but this isn ’ t likely to be anytime soon ,” says Frazer Harper , VP of Payments Products at Dojo .

Although there is unquestionably appetite for digital payments , there are still drawbacks to the technology that could prove to be deal-breakers . “ Not only is it a payment method reliant entirely on device battery life , it ’ s also one that could leave people behind ,” Harper continues . “ It ’ s important we don ’ t exclude people as a consequence of tech innovation – and with traditional card usage still high , we see these physical cards playing a key role for the mid-to long-term .”

DR STEPHEN WHITEHOUSE PARTNER , OLIVER WYMAN ’ S RETAIL AND BUSINESS BANKING PRACTICE

82 August 2023