The death of the plastic card has been discussed for some time. In the last year this refrain has become more frequent as mobile devices become more powerful, talk of mobile wallets increases and the handset is touted as a viable identity credential.
With near field communication on the horizon, card manufacturers are understandably concerned about the longevity of their core business. In October, I spoke to a group of card manufacturers about the future of payment and identification technology. One of the chief concerns expressed in the Q&A: Are plastic cards nearing the end of their lifespan?
Long story short, the card isn’t going away anytime soon.
Don’t get me wrong, the mobile is going to be huge and the card industry should be preparing for it. More than half of 18-to-29-year-old U.S. adults now own smart phones and overall 35% of U.S. adults own a smart phone, according to a July 2011 study from the Pew Research Center Internet & American Life Project.
But between new payment technologies, including EMV and NFC, and various identity initiatives there will still be a market for cards. Though it’s likely more and more of these cards will be much more advanced than they are now.
In the payments world, just because people have NFC handsets and merchants can accept them doesn’t mean plastic goes away. U.S. banks are just now beginning to issue EMV cards. The new Visa rules that give merchants a PCI waiver for deploying terminals that accept EMV and NFC is the first move in that direction.
While Visa’s first deadline is October 2012 for the PCI waiver, it’s going to take time for merchants to switch over their point of sale infrastructure. There’s also the learning curve and comfort with a new technology.
I may be comfortable paying for my coffee with my mobile but when I’m buying a new television I’ll want something a bit more secure. And how many people are going to feel comfortable turning on the payment app and then handing that to a waiter to pay for a meal at a restaurant?
On the identity front it’s more difficult to tell what the credential of the future will look like but the card is certainly a leading candidate. The National Strategy for Trusted Identities in Cyberspace is looking to add extra security for online identification and smart cards will be an option.
There are also the government projects. While PIV government issuance is pretty close to complete the market for PIV-I could be enormous, more than 50 million credentials, some predict.
Police, fire fighters, EMTs and utility workers could all one day carry PIV-I credentials. The corporate market is also looking at PIV-I. Large companies with multiple offices want a standardized specification that can be used anywhere.
The mobile will have a role in the identity space too. FIPS 201 is undergoing a revision and federal smart card officials want to be able to port PIV functionality to the mobile device. Whether or not this draft will include that capability is still being decided.
The mobile will also likely play a role in the national strategy. It doesn’t require the issuance of a new credential and it can be used in a number of ways with computers, connecting to a PC for multi-factor authentication, digital certificate transfer or one-time pass code generation. With more handsets shipping with onboard biometrics readers, there is the possibility for three-factor authentication with the phone and the computer.
Card manufacturers need to prepare for the future. There may be fewer cards issued in the future, then again the numbers may not decrease. What seems certain, however, is that the cards that are issues will be more advanced.
I’ve been covering industries that use plastic cards for almost 12 years and just about every year someone predicts the end of the plastic card. It hasn’t happened yet and I suspect we may still be having this conversation 12 years from now.