This increases flexibility, allowing upgrades at the component level, without disrupting entire systems. Microservices architecture structures an application as a collection of services that are organized around business capabilities and are independently deployable. Card issuers must modernize to keep up, by adopting microservice-based technical architectures, increased use of application programming interfaces (APIs), and cloud-based hosting of processing platforms. The easy and intuitive experiences offered by leading online retailers and tech platforms have heightened customer expectations in financial services. This ability to differentiate will be critical to combat emerging payment alternatives threatening card transaction revenue. Multiple debit cards in the market now offer crypto rewards. Issuers are also offering benefits that resonate with consumers’ passions, including support for small businesses and environmental sustainability. We’ve seen some issuers allow customers to adjust premium travel benefits to at-home benefits while others waived annual fees for consumers under duress. More dynamic rewards and benefits are another trends accelerated by the pandemic and set to continue. In response, JP Morgan has partnered with Marqeta to provide digital issuance to commercial cardholders, who can then spend immediately through mobile-wallet provisioned cards. For example, COVID-19 saw a rise in demand for cards to be issued virtually, a trend that is likely to continue. Enhancing customer-facing productsĬard issuers are enhancing the customer experience through new features such as better rewards and personalization and moving quickly to adapt as conditions change. ![]() ![]() While these e-commerce offerings do not necessarily impact the revenue of traditional card players, companies should consider how to compete in what is a rapidly expanding market with huge growth potential.Ĭard issuers are responding to increased competition and innovation by creating modern, resilient platforms that allow them to quickly develop and bring to market the feature-rich options customers want. 3 A number of e-commerce leaders have developed new payment solutions for these consumers, which allow them to pay via cash, wallets, and bank transfers and use partner stores to finalize transactions. E-commerce offerings for access by the unbanked and underbanked populationĪs recently as 2019, approximately seven million US households were without a bank account, limiting their options to shop online. While these platforms have minimal to no impact on interchange or transaction volume for processors or issuers, they do highlight the need to bring better rewards and incentives to market faster to stay competitive.Ĥ. Many are fighting back by joining forces to offer similar solutions.Ĭard aggregation platforms allow consumers to decide which card to use for a transaction after the POS, giving them time to assess reward offers. However, for card processors, issuers, and networks, POS’s popularity is negatively impacting transaction volume and interchange. Its ability to lift sales appeals to merchants while POS’s deferred payment options are attractive to customers. POS financing is one of the fastest-growing consumer lending products, expected to grow at a compound annual growth rate of 28% through 2023. Legacy card networks are responding by diversifying product portfolios through acquisitions and new products, to maintain as much transaction volume as possible.Ģ. QR codes satisfy customers’ needs for contactless payments while also offering merchants the potential of lower acceptance costs if the transaction is facilitated by an Automated Clearing House (ACH) rail.
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