Once a quiet corner of the financial world, the payments sector has been on a roller coaster ride lately. The credit card sector is large and growing rapidly, with innovative technologies changing the way people make purchases. Mobile and alternative payments are also experiencing considerable growth, with a range of payment providers including PayPal, MasterPass, Apple Pay, Amazon Payments, and Google Wallet.
In the months to come, the balance of power will continue to shift in favor of credit cards. With regulatory changes in interchange fees and the attempt to be less dependent on cash, usage of cards will increase radically. The chip-equipped cards are raring to go the U.S. is steadily catching up with Europe in the use of Europay, MasterCard, and Visa (EMV) chip cards. According to the estimates of Smart Card Alliance, nearly 600 million U.S. citizens are expected to receive an EMV card by the end of 2015. This is largely driven by the need to stem the flood of large-scale data breaches and increasing rates of counterfeit card fraud. Add mobile payments, wearable technology, and virtual currencies to the mix and the magnitude of the changes happening in the payments arena will be clear.
While it is great news that the U.S. consumer payment technology is moving away from legacy technology, companies cannot afford to relax. Security is something that must not be taken lightly as already evident from the data breaches involving millions of credit and debit cards at retailers like Target and Home Depot. As the window for magnetic stripe related frauds closes, fraudsters will divert their focus to the Card Not Present (CNP) space. Companies are also considering emerging initiatives such as tokenization and encryption to take a layered security approach to thwart the attackers.
The evolving landscape for payments offers new challenges and opportunities to all segments of this industry. To leverage the opportunities provided by new business segments, global banks need to ensure that the challenges are adequately addressed. To assist banks in this endeavor and reinvent themselves, Banking CIO Outlook presents to you its payment card industry special edition of 10 Most Promising Payment and Card Solution Providers featuring insights from industry experts around the world. Let us know your thoughts.