It’s usually the case. The company that develops a technology first doesn’t remain at the head of the pack. Look at Apple Computer. Had the best operating system out there, but Microsoft had the best marketing strategy. Apple’s still with us, but it will never capture the market share Microsoft has.
When it comes to the credit card industry, much the same effect has taken place. While the U.S. invented the initial credit card processing technologies, foreign countries have added transaction enabling technologies that are making their way back to the U.S.
Whether these transaction technologies make it more attractive to the credit card issuers to offer more low-interest credit cards might be questionable. Yet, there are reasons to believe these technologies make it easier for consumers to manage their credit responsibly. That’s something that helps consumers attract those lower interest rates.
According to First Data, a payment processing company, there are four technology trends that are going to really make a difference for consumers.
1) Mobile payments. Many credit card issuers are looking at replacing the credit card entirely. Your mobile phone would become your credit card. This convenience is a tool many busy consumers can leverage to improve their handling of finances.
2) Multifunction cards. Picture a card that looks about the same as the low-interest credit card you carry in your wallet right now. But even though it looks similar, it’s really a smart card with a multiple functions included. The card may link to your debit and credit card accounts. You choose how a transaction is processed. If your checking and credit cards are all with one bank, there’s the potential for useful money management tools arising out of this technology.
3) Contactless cards. These are the wave and pay cards many Americans already have in their possession. Use is limited by the number of vendors using the technology. All you have to do is hold the card near the data reader.
4) Improved fraud protection features. New technologies such as “rolling codes” encryption and PIN-enable cards with ultra-thin buttons on the fact of the card are just two of the new methods for reducing fraudulent credit card transactions.
While none of these technologies guarantee credit card companies are going to start issuing more low-interest credit cards, some of these technologies do reduce the risk to both the consumer and the credit card issuer. Lower risk creates a more profitable environment for the credit card issuer. Will that savings be passed on? Only time will tell.
