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The Lendified Blog

 

Are Credit Cards Out of Date? Doing Business in a Digital Age

The ability to pay for things using a plastic card has brought our society an unprecedented level of convenience, speed, and flexibility. Paying for sums large or small can done anywhere with a quick swipe of your card even if you don’t have the funds to pay at the moment.  The numbers don't lie: there are 72 million major credit cards in circulation in Canada today. Still, it seems as though doing business in Canada and the reality of credit cards is changing.

Credit and debit cards have revolutionized the world as we know it. They aren’t going anywhere yet, but the signs are pointing to mobile payments via smartphone as the next revolution - one that will make credit and debit cards go the way of the cassette tape, video rental stores, and phone booths.

A changing landscape

The rise of the internet and mobile technology has led to a revolution in the way that payments are done. In the past, cheques, wire transfers, cash on delivery, and mail-in money orders were the payment method of choice for large sums of money or long-distance payments. The economy was limited by distance and geography. That is no longer the case. It’s ironic that what credit and debit cards did to that world are what mobile payments in the digital age will do to them. The competitive world of online payment processors sports big names like Paypal, Skrill, and Apple, and digital wallets available on your phone mean that plastic cards are now the more cumbersome method.

Cumbersome payments

Think of the difference that only a few decades has made. When cards came about, cash and checks were the main methods of payment. You had to count out the money or write out a check. Cards were revolutionary at the time. Now, cards take too long to swipe and process. Online payments require you to enter 16 digits, your name, the card’s expiration date and security code. A mobile processor attached to your account via a secured application could mean payment in less than a second with just a wave of your smart phone.

The digital age

The digital age has given us incredible opportunities. Financial institutions have immediate access to customer data. This gives them everything from location to credit score right away. This leads to better quality services and processing.  Banks can now allow customers to make payments immediately right out of their accounts via a phone application. The majority of customers surveyed said they would happily use their phone to pay if they could. Think of the advantages of instant secured payment, the consolidation of credit and bank accounts, the consolidation of loyalty programs, and the many other things that the digital age has brought us.

It’s clear that Canadian small businesses are handling more sales via credit cards online than ever before. However, the writing is clearly on the wall. The development of mobile payments that are more convenient, flexible, and secure than their plastic counterparts, as well as the drive for personalization and convenience from customers is showing a trend toward credit and debit cards becoming obsolete. The digital age is not just revolutionary for media, entertainment, and socializing - it’s changing the world of finance, small business loans, banking, and payment processing as well.

About the Author: Michelle Pinchev