“Cash or card?” That has been a familiar question since the dawn of the credit/debit card. Credit/debit cards made obsolete the need to carry large sums of cash, but wearables could eliminate the need for both altogether. Two major credit card companies, Visa and MasterCard, are seeking to use wearables as payment options. “The premise is that every connected device is a payment device and every connected device is a marketing vehicle for us to reach the consumer,” said Raja Rajamannar, chief marketing officer (CMO) at MasterCard. Rajamannar’s statement confirms that credit card companies want to give consumers multiple options other than just credit cards.
2015 saw a huge amount of data hacks pertaining to credit card information. Major retailers such as Target and Home Depot were hit, and the financial information of millions of customers was compromised. Credit card companies are hoping that wearables can (literally) add an extra layer of protection for consumers. MasterCard is working on a key fob, dress and a ring that can double as credit cards, partnering with General CMotors, fashion designer Adam Selman and Ringly, a wearable tech company, for a line of wearables.
Visa, one of MasterCard’s competitors in the credit card industry, is seeking to partner with car manufacturers to utilize the car as a payment method. One possible application could be at restaurants with a drive-thru. “We’re an enabling platform and we want to be able to connect to as many devices as would want to do commerce,” said Jim McCarthy, executive vice president of innovation and strategic partnerships at Visa. “We’ve effectively hung an open sign on our front door and have these companies coming to us.” McCarthy also mentioned that there is a car sawed in half at Visa’s innovation lab, showing that they are committed to blending automobiles and payment technology.
Credit card companies are targeting millennials so that the younger generation can influence the older generations to adopt wearable tech. “It’s only logical companies like Visa and MasterCard are experimenting with technology and improving the payment process for consumers since millennials are known as influencing older generations,” said Jeff Fromm, president of FutureCast, an agency that focuses on millennials. “As an industry, they’re slow and late to the party—as a result we’ll see a number of startups take significant amounts of value from historical leaders in the industry.”
MasterCard may have predicted the shift earlier than their competitors. In 2010, the company opened a lab in the Flatiron District of Manhattan to focus on innovation in the credit card industry. “It looks at the future from a fresh perspective,” said John Sheldon, senior vice president of innovation management at Mastercard Labs. The department is also trying to cater to real estate brokers, restaurants and authentication using biometrics, rather than passwords and PIN numbers. “Five years from now, you won’t need passwords,” Sheldon said. Given the recent security breaches of password and PIN-based systems, the road to 2020 will be an innovative one for the credit card industry.