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Colorful stack of credit cards and shopping gift cards.  Macro wThe credit card came into usage last century, starting out as a special form of privileged payment in the 1920s for high value customers of certain businesses, and eventually transforming in the 1950s into the payment system we know and use today. It has proven to be a safe and convenient form of payment for decades, and it seemed like with the rise of the Internet in the last 20 years, its position as the premiere system of payment was assured.

Ironically, it is now that very same Internet that made credit cards so indispensable that is eroding the usefulness of this payment system. The high fees that some credit card users are required to pay, combined with interest rates and charges credit card companies pass on to both vendors and customers have all been considered “necessary evils” that people tolerated because there were no better alternatives.

In the 21st century, however, suddenly there are alternatives. And slowly, many consumers and vendors are starting to discover and investigate them.

The Mobile Road

One of the biggest advances has been the use of that most ubiquitous of 21st century devices, the smartphone. As a personal computing device anyone can carry in their pocket, it’s been the staging ground for many interesting initiatives, including pioneering attempts to use it as a “virtual wallet” where the use of the phone itself becomes an acceptable substitute for a credit card or physical wallet.

Of course, with such a new technology, there are many companies still experimenting and innovating, meaning that there’s no large universal industry or financial standards, the way there are with credit cards. But in the same way that the convenience of the credit card couldn’t be denied, many are starting to think the same thing about mobile payment systems using personal devices.

Biometric Payment

Credit cards, debit cards, mobile payment systems and even gift cards are all essentially representations of money you theoretically have, just not on your person. In the case of credit cards, the purchase you make goes towards the credit card company you do business with. For debit cards or some mobile payment systems, these cards or devices act as intermediaries to confirm your identity and access your bank account.

In all of these cases, the card and/or device is part of an ID confirmation process that is required before payment can occur.

But some companies are now experimenting with eliminating cards or devices of any sort entirely, and relying on you—or more specifically your body—as the means of identification. The technology already exists to simply place your fingers on a special sensor, and, after reading your fingerprints, the transaction goes through as a credit card purchase, making the need for even the physical credit card redundant.

The credit card system is still a major form of payment in today’s financial world. But it may not always remain so. Cash is increasingly becoming a less popular form of payment. There may come a time when credit cards are the same if the right technology and business model take off.

Posted in credit card processing, Credit Cards on Feb 02, 2016