Banking Payments

Will the physical card be eliminated?

Will the physical card be eliminated? Main photo: Yulia Grigoryeva,
Written by Faisal Khan

Faisal Khan shares an insider’s perspective on the plastic card industry, and finds that business isn’t on life support just yet.

A couple of months ago at Money2020 Europe, I accidentally made a friend while waiting for the taxi at Copenhagen Airport. I had no inkling he was also attending the conference. The poor man had lost his luggage and had been travelling for over 24 hours. He was just happy to be on land and heading towards the hotel. I wished him well and we said our goodbyes.

The next day, I bumped into this gentlemen again at the conference. I asked if he had gotten his luggage delivered (since he was wearing a change of clothes). “Sadly not,” he said. We chatted for a while and I asked him what he did for a living. It turns out he works for a company that manufactures printed inks and films for the physical card industry. Your average debit or credit card, he explained. Even loyalty cards.

Here I was thinking, I’m looking at a legend; a person who has been in an industry that is (in my opinion) dying. The plastic cards industry. But, boy, was I wrong.

I’ll withhold the name of the gentlemen and his company (as I don’t have his permission), but it turns out that this gentlemen travels the world attending banking and payments conferences, trying to gauge how the industry is doing and what new features they can add to their product line. His company sales are booming! Read that again: he supplies ink and film to the card manufacturers and they cannot keep up pace.

We sat down for lunch the next day and I was brimming with questions. I told him quite frankly that I thought the industry of physical cards is dead already, and living on life support. He shared some numbers with me that proved me quite wrong. I cited the example of Blockbuster and the VHS tape, giving the analogy of how the VCR/VHS tape tried hard, fought the battle, but eventually lost to the CD/DVD market. He listened for a while, smiled and said something to the effect that, while he agreed with me, the physical cards market isn’t dying anytime soon – at least not in the next five years.

Keeping an eye on the competition

Despite the digitisation of payments and the relatively low cost of acquiring and distribution of digital money instruments, the card market (especially the loyalty card market) is huge. We have over three billion+ debit and credit cards issued in the market. The number of loyalty cards far, far exceeds the total number of debit/credit cards. In short, the market is huge.

My new friend reminded me that part of his travels are aimed at keeping an eye on the competition (i.e., digital money) and admitted that eventually the physical cards market will be history in a few years, but right now, from the vantage point that he has, it’s still growing year-on-year.

By this gentleman’s estimate (and he wasn’t sure either), there are over 50 million POS (point of sale) terminals/machines worldwide. The financial sector has invested heavily in them and they’re not about to be rooted out anytime soon. Referring to the CD/DVD examples I cited, he was seasoned enough to point out that the banking and finance industry wasn’t tied to it. The entertainment industry was, and the size of the entertainment industry is far smaller than the worldwide debit, credit and loyalty card market.

A couple of weeks ago, I had put up the following picture on my social media:

Faisal Khan Tweet: "All around the world, the people I meet in payments want to make this picture look like a thing of the past."

It made me reconsider. Coming back to the conversation with the gentleman at the conference, it made me pause, step back and rethink my personal opinion where I see the industry of the physical card dying a quick death.

For what it’s worth, I have to agree with the unnamed gentleman from the ink and film manufacturer for physical cards. Death is inevitable. He knows it. I know it. The industry knows it. Just how long the physical cards industry has left to live is debatable. Hearing the gentleman talk about his experiences, I have little reason to doubt him. He may be a dying legend, but I subscribe to his ideas that he and the industry still have a few good years left in them.

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– This article is reproduced with kind permission. Some minor changes have been made to reflect BankNXT style considerations. Read more here.

About the author

Faisal Khan

Faisal Khan specialises in cross-border money transfer and payment systems as a payments consultant and evangelist for digital money. He is a regular contributor to the Around the Coin podcast.

1 Comment

  • No doubt an interesting approach and associated with the reality of many other industries that are turning their channels to digital media, but I see even a major life ahead mainly by the existence of many emerging markets where the integration of technology, although advances, is at a slower pace than in other markets.

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