By Mica Moseley, Chief Revenue Officer of Arroweye Solutions
A surge in contactless card payments and need for on-demand payment solutions continues to drive growth in the payments card market: with smart cards.
The latest industry data predicts $3 billion in growth on this market from $13.9 billion in 2021 to $16.9 billion in 2026 — or a CAGR of 4% during this five-year period. This growth is being driven by significant demand for dual-interface cards that allow for both a contact and contactless payment experience. The race is on across the payments ecosystem to offer payment solutions that align with these demands.
The smart card market is gaining traction as financial institutions and businesses look to deliver innovative payment card offerings that allow their customers to transact in more diverse payment environments. We explore how a surge in contactless and on-demand payment solutions is impacting the smart card market — and why payments leaders must be equipped to adapt with these trends.
Adapting with the Times: Implementing Fast, Secure Contactless Payments
The pandemic made it clear the contactless payments trend that was already gaining steam is here to stay. Digital, contactless payments have become the norm as businesses and consumers look toward safer, quicker ways to pay — driven in large part by the COVID-19 pandemic and evolving payment habits.
The flexibility of having dual-interface cards helps card issuers and financial institutions stay ahead of the latest payment trends. Dual-interface cards allow for contact and contactless payments in a fast, secure manner to thwart hacking attempts to keep cardholder data safe. Offering payment experiences that enable traditional, digital and tap-and-go options allow businesses to tailor solutions to fit their customer’s needs.
Dual-interface cards can be issued in credit or debit, and they provide consumers a flexible payment experience as they can pay at a contactless payments reader, or a physical point-of-sale, as well as used for mobile and online transactions. For FIs, fintechs and businesses looking to streamline their EMV transition to offer dual-interface cards, looking toward a solution provider with on-demand capabilities can ease the smart card integration.
The Technology Driving the Rise of the Dual-Interface Card Market
Equipped with a hidden antenna, a contactless card allows users to wave their card in front of a reader to deliver a seamless and secure transaction. Dual-interface cards offer the best of both words as they present consumers with opportunities to pay how they prefer. Providing these innovative contactless payment options eases restrictions for consumers that want a card that can easily be adapted to their individual needs.
Today’s smart cards that offer a dual-interface payment experience rely on RFID or NFC technologies to transmit a payment with a number of devices. This includes the ability to verify the necessary payment credentials without having to enter a PIN at the point of sale.
Dual-interface cards enable fast, tap-and-go payments that are secure from hacking malware. The cardholder has the ability to use the cards at a contactless point-of-sale or a physical card reader — along with a number of digital payments options. By removing payment barriers, this presents fewer restrictions for consumers who want a card that can adapt to multiple payment environments.
Adapting doesn’t mean rushing to mass produce large volumes of dual interface cards, since they expire and are more costly to produce than EMV cards alone. On-demand models solves for this problem to help payments companies of all sizes meet the demand for smart cards — while keeping issuing and production costs balanced.
Better Competing in the Ever-Changing Payment Card Market
Smart cards are a great way for banks, fintechs and non-financial businesses to get a flexible payment tool in customers hands quickly. Physical payment cards enable a mobile wallet or digital payment app experience that drives online spending or in-store contactless payments via a mobile app. The ability to upload physical card credentials onto a digital wallet, virtual bank account or with any of the “pays”, such as Samsung, Apple and Google, helps bridge the gap between in-person and online payment experiences.
Physical payment cards also provide a fast, simple way to keep your brand top of mind. All cardholders need to be equipped with the plastic payment cards to be able to pay in situations that don’t allow for a digital payment option. But consumers want those cards to be adaptable to multiple payment scenarios. Offering dual interface and contactless payment cards presents a unique opportunity to keep your brand relevant.
Smart cards and digital are the trends everyone is talking about, but behind those options is still the reliable physical card. This is why relying on a payment solution provider to enable both sides of the payments equation matters. The ability to get cards printed on-demand that are customized to your customer’s needs — including digital print technology and dual interface — are game-changers in today’s ever-evolving payments market.