What's the current state of digital cards?

With cash, physical cards, digital cards and cryptocurrency, customers have never had more payments options. During COVID-19, many customers began to flock to contactless options, such as mobile wallets, in fear of the virus spreading through physical means such as cards or cash.

Although these concerns have waned in recent months, many still have questions about whether digital cards and mobile payments will continue to grow or will stagnate. After all, many merchants still do not accept mobile payments and potential users may not see a benefit in switching from tried-and-true methods to digital cards. In addition, users are often concerned about security breaches.

That raises a big question — what's the current state of digital cards and where are they headed? To get the answer, ATM Marketplace reached out to Randy Piatt, VP, product solutions and marketing at Fiserv, a payments provider, and Crystal Wichita, COO at Cornhusker Bank, based in Nebraska, via email interviews.

Q. During the pandemic we heard a lot about consumers turning to digital cards Is this trend still ongoing? Why or why not?

Piatt: It is very much ongoing! This trend is being driven by the numerous new digital purchasing flows from retailers across the spectrum. Larger retailers primarily known for their in-store or online experiences are not only blurring the lines between the two, but also creating new journeys around curbside pick-up and in-store pickup. Subscriptions continue to grow beyond the well-known streaming services into other verticals like food/grocery, clothing, beauty and more, all offering curated product experiences.

Retailers, both online and in physical stores, continue to streamline checkout and other buying experiences, alongside merchants offering robust digital based on-demand services (rideshare, food delivery etc.). All of these are digital extensions of buying journeys we have known and experienced as consumers for decades, but are now creating more loyal relationships and a stronger affinity for particular merchants who can deliver convenience and preference through well thought-out digital journeys. The experience is the product. The experience is the service.

Q. What are some factors holding back wider adoption?

Piatt: It is the combination of user education and retailer pace. Users hear about breaches and such every week, and there is a sizable segment that isn't sure that these types of buying and payments experiences are as safe as everyone says. These are the same consumers still writing checks or getting paper statements, and they are lagging behind the experience curve with these hesitations. But as more retailers craft compelling digital experiences, and reduce available in-person experiences, customers will start migrating.

The good news is that the pandemic converted many of these lagging segments into proponents of digital experiences, because of not having access to in-person experiences, which means wider adoption is well on its way.

Q. What do you see as the top trends with digital card innovation?

Piatt: The innovation in the market is very much driven toward increasing access to the card. The card is the most common interaction point for the cardholder with the issuer, which makes maintaining that access a critical business priority. Digital issuance is leading the way, prioritizing both new and replacement card journeys, where the access to the card is provided digitally and purchasing is possible even before the card plastic is received and activated.

Digital issuance can enable the issuer to get 'early month on book' type spend for new accounts, while also reducing the occurrence of spend attrition in lost/stolen/replacement journeys where the cardholder might start using a card from a different issuer while they wait for their replacement plastic card. Additionally, issuers are very focused on increasing the footprint of digital self-service journeys that reduce phone calls and foot traffic, especially for those more transactional interactions (lost/stolen, travel plans etc.), and allowing their personal touch to shine through on more high-value relationship building interactions (new accounts, cross sell etc.). This allows the customer to feel more empowered by having control over the day-to-day management of their card without having to call someone or stop into a branch.

Q. How can institutions differentiate their cards?

Piatt: Consumers have choices in their wallets, likely having debit and credit cards from multiple issuers. This means issuers have to focus on giving their cardholders compelling reasons to choose their card over the other options. This differentiation is predicated on the experience. In this age of 'I want it now,' digital experiences that are convenient, secure and empowering, alongside physical experiences that deliver the same, are key. Contactless cards and digital wallets allow for the broadest range of use by the consumer, and elevate that card in the preference stack. Consumers want to understand and manage their cards and spend quickly and easily, from the convenience of their phone, tablet, or any other device that doesn't require them to call or stop in to a branch.

Q. What are some ways to improve the customer experience with digital cards?

Piatt: As the industry endeavors to have more segments get comfortable with digital card experiences, issuers are working to drive customers to less resource intensive channels, and merchants are doing the same. Creating that willingness is all about giving customers the information they need, when they need it, and reducing or eliminating the need to make a call or stop in to a location. Issuers must constantly be identifying the service experiences with the highest volume, and work to push these to the digital domain where it makes sense to do so. Cardholders want convenience and ease of use, and the retention of the relationship will now be driven by how easy it is to manage for that consumer.

Q. What makes your digital card unique?

Wichita: In general, having the access to the digital services is key in today's world.

Q. What has customer feedback been like?

Wichita: CardHub has been an excellent addition to our digital banking services. Consumers prefer logging in to our branded mobile app for all services instead of utilizing a buddy app. There are great features built into CardHub that allow customers to be more in control of their day-to-day transactions to monitor and help prevent fraud situations. Customers enjoying having the digital services at their fingertips. Self-serve has increased and will likely continue to rise because of the improved end user experience.