Fraud Protection & Compliance
Just as the Wild Card Round is followed by the Divisional Round in the NFL playoffs, fraud and payments predictions are always followed by New Year’s resolutions. This year, in the spirit of efficiency, I’m combining both predictions and resolutions by forecasting that in 2018, my wallet is going to go on a diet; it will definitely become slimmer as physical (plastic) credit cards are replaced with payment apps on my smart phone.
I’m betting your wallet will embark on a diet, too. Keep reading to learn the tips and tricks of a successful weight loss strategy.
Goodbye to My "Costanza Wallet"Jokes about my overstuffed “George Costanza wallet” are a tradition in the Horan household. For years it’s been so heavy that I’ve taken it out of my pocket before stepping on a scale. But this year I detected some slow but steady weight loss in my wallet; it became thinner as I started transferring my loyalty cards (for grocery, drugstore, home improvement and other retailers) onto my iPhone.
However, I (and most of my friends) have not yet jumped wholeheartedly onto the mobile payments bandwagon. Will we do so this year? Intrigued, I started asking industry friends and FICO colleagues if their wallets were getting skinnier, and why.
Payment Apps ProliferateSure enough, wallets among fraud and payments professionals had already dropped some poundage. One of my colleagues on the FICO fraud team reported that he has eight payment apps on his smartphone, with functionality ranging from broad (ApplePay), to person-to-person (Venmo) to card-specific (ChasePay). His wallet was a few cards lighter as a result.
Another FICO colleague, a member of the millennial generation, said that she gives equal time to PayPal, Zelle, SquareCash and Venmo to make P2P payments, a big factor in her social and personal life. She uses SamsungPay to hold all of her debit and credit cards, and is pretty happy with that. Her wallet, she demonstrated, was already sleek and slim.
Home Screen Is the New Wallet ShareBoth of my colleagues’ wallets illustrate yet another facet of the “digital payments wars” that have been raging for the past couple of years: Our smartphones have become the battle ground for market share. Our phones have become quite crowded with all kinds of payment apps, in addition to the social media, maps, email, news and sports apps that have become woven into the fabric of our daily routines.
Therefore, the big question for 2018 is: Which payment app (or apps) will join the “must-have” apps populating the precious real estate of our smartphone home screens?
My Predictions for 2018All of these questions lay the foundation for my fraud and payments predictions for the coming year:
- 2018 will be the beginning of the end for physical credit cards. However, their functionality will become even more omnipresent in our lives as more cards migrate to consumers’ mobile phones.
- The resulting “payment apps fatigue” will drive an industry shakeout, as the novelty wears off niche apps like CakePay.
- Consumers will settle on one or two payment apps to make the majority of their purchases and P2P payments; these apps will gain coveted spots on users’ smartphone home screens.
- Because most cards will live in our phones instead of our wallets, we will never dip our EMV chip cards as much as we used to swipe our old magnetic stripe cards.
- If we do have to use a mag stripe card at a retailer that doesn’t accept mobile payments or chip cards, an alarm will go off in our heads as we recognize the potential security exposure. Retailers that don’t offer modern, secure payment choices will lose sales. “Panic at the Checkout” will have evolved into “Caution at the Checkout.”
Follow me on Twitter @FraudBird.