Right now, and for the foreseeable, near future, the usefulness of the credit card as a system of payment processing can’t be questioned. It’s the ease of verification and speed of processing that have made credit cards one of the de facto methods of payment for products and services around the world, especially for those businesses that cater to a global audience using different currencies in different countries.
But is it safe to assume that the credit card as a form of payment is going to be with us forever? At one point, the use of a horse and carriage was the dominant form of transportation, and no one believed anything would ever replace it. Years later, the arrival of the car proved otherwise. The same thing is happening with fossil fuels like coal and petroleum as new, more advanced methods of generating power finally trickle into mainstream use.
So what about the credit card? What is the future of this system of payment? Some theories suggest that within the next 50 years, this ubiquitous system is going to become less popular, and here are a few reasons for that line of thinking.
Right now, the undeniable appeal of a credit card is the ability to purchase something now, and then pay for the full price later, with interest. However, companies like PayPal are now experimenting with their own systems to do this, and then offering these services to retailers. While PayPal calls their service “Affirm,” what it really means is that it allows the retailers themselves to directly offer credit to the consumers.
This means that the consumer can now buy an item directly from a retailer but, rather than pay the credit card company back for the purchase, the customer can pay the retailer instead. Installment plans and even lower interest rates make this more attractive to the customer, and the retailer benefits from both the sale, AND receiving the interest from the payments that a credit card company would normally collect.
For credit card companies themselves, this presents some interesting competitive challenges in order to remain relevant. For customers however, it’s a win-win situation with better terms and interest rates as companies go head-to-head to fight for that customer credit.
Another interesting development is the idea of a “Universal Currency” that takes EVERYTHING customers currently use to buy things, and consolidates it all in one place for much easier payment processing. “Coin” is an example of this. It is a unique centralized wallet that takes debit cards, credit cards, even loyalty cards and gift cards from retailers like Amazon or Best Buy, and throws all of these various, separated forms of purchasing power to combine them into one central card.
This means that regardless of the situation, as long as a point of sale is not cash only, this device can handle every single type of purchase. For payment processing, it presents some unique new possibilities, and it will be interesting to see where it goes.