This is a Saturday Evening Post, you have been warned. Caveat Lector.
Let’s see what happens when we use the concept of the humble credit card to try and tell the future, albeit a very small part of the future. [If you’re interested, take a look at the Wikipedia entry I’ve linked to, it provides quite a lot of useful information].
The term has been around since the late 1880s, the physical object since the early 1920s, and it’s gone through a whole raft of cultural and social and technical adaptations since then; the credit card we use today bears very little resemblance to its 1920s antecedent; the credit card we will use tomorrow will be even more removed from its origins, yet it will have the same DNA.
Initially the credit card was a fuel card:
- issued by a single entity (the fuel provider)
- used for only one purpose (buying fuel)
- usable in only one place (the fuel provider’s premises)
- available only to a small elite market (1920s automobile owners in the US)
Despite these limitations, it had some interesting characteristics:
- It represented a trust relationship (between the issuer and the automobile owner)
- It identified and authenticated the bearer of the card
- It authorised and permissioned that bearer to do something
- It provided a modicum of simplicity and convenience and mobility
You can imagine what it would have been like. Conversations building and underpinning relationships and then, only as needed, transactions. The Cluetrain was running.
Now let’s look at what happened since:
The card became multipurpose. How? Through intermediation and disintermediation. The issuer was no longer a merchant with goods and services, but an intermediary that provided cash credit. A credit card issuer. A bank or financial institution. One card, many merchants where it could be used. Many things that could be purchased. That process of disintermediation and reintermediation has carried on to a point where all kinds of institutions now issue credit cards. You decide where to get your card from.
The card became ubiquitous. More issuers. More people using cards. More places to use cards. Initially restricted to a few Western countries, the credit card is everywhere now. You decide where to use it.
The card represented different pricing models. The initial card was a fixed term fixed limit charge card. Charge only, pay the whole balance off each time. Fixed payment credit, pay a fixed amount back each time. Hybrid, choose what you want to pay, within certain minima and maxima. Low interest, zero interest, high interest. With an annual fee. Free. All kinds of everything. You decide the funding model.
The card became personalisable. Initially the card was Any Colour You Like as Long as It’s Black. Ford Model T, come back, all is forgiven. You didn’t get to choose what it looked like, how your name would appear on it, anything. You took what you were given. Now you can choose “skins” for the card, select “affinity” programs and wear your card with pride, choose how your name appeared on the card. You decide what it looks like.
The card became an objective carrier of trust and identity. Whether it was credit-rating, credit-score or even deposit-driven, the card became a token bearing trust. Initially it was used to support a delayed-payment transaction. Now you can use a credit card to guarantee things, to underpin who you are, sometimes even to exhibit your Bling status. Centurion cards and all that jazz. You decide the purpose.
The card became a target for criminals. Security became an issue. As the card became ubiquitous and multipurpose and “clonable”, it created a new business opportunity. Crime. Initially this was physical and analog crime. As the underlying technology for the card evolved, so did the technology used by the criminal. Card crime soared. And we kept building new ways of protecting the card from misuse. Today, with signature and chip and PIN and CSV and encryption, cards have become fairly secure. Without making them fundamentally useless or rendering them unusable. You use them simply and safely.
Card production costs decreased sharply. By now it probably costs me more to work out how much a card costs to produce than to produce the card itself. By now much of what makes a card up has reached Made In China status. The ultimate cost-decrease accolade. Now you can have as many as you like, or as few as you like. You decide how many.
Card longevity increased. Original cards had to be replaced often for two reasons: the materials used to make the card, and the process used to read and validate and use the card. As a result, card validity was kept short. Now, with advances in materials technology and reading processes, cards are issued for much longer periods. You decide how long to use them.
Cards became shareable. Initially you had one card, just for you, tied to a specific bank account. Now you can have multiple cards, tied to a card account and not a bank account. You can use the multiple cards yourself, for segregating transactions. You can give cards to family members and to friends. You decide who else can use your card.
You decide. You decide. You decide.
I think I’ve made my point, but there are a few more things, important things, to point out:
Everything that happened, happened as a result of four things:
- innovation through market adoption
- simple and relentless standardisation
- consolidation amongst industry participants
- emergence of global mega-utilities
So what happens next?
We will see cards consolidated even further, as customers push back against proliferation. One credit card underpinned by limits from multiple credit providers. But for this to happen, there has to be a fundamental shift in the concept of card ownership. Today, the card is the property of the issuer, and must be returned on demand. Tomorrow’s card will be the property of the customer, who “mashes up” the facilities and credit lines and limits and affinity rewards. One card.
We will see personalisation taken even further. Make your own skin up. From Flickr if necessary. You will choose your own “number”, but there won’t be a 16 digit thingummybob right across the front of the card. You need some unique handle, but there’s no need to display it. As long as a digital version of it is embedded and readable. Your card.
We will see both online and offline behaviour supported. Cards will work even when you’re not connected, but in Safe Mode. Lower Limits. Fewer places to use them. Always On.
We will see more virtualisation. The physical card will not be the only game in town; you will have virtual cards, logical extensions to current payment models like PayPal and WorldPay and even Grameen. Virtual and physical.
The credit card. Multipurpose. Ubiquitous. Personalisable. Plug and Play anywhere anytime for any purpose. Based on open standards. Solving pieces of the identity and authentication and personalisation puzzles. Safe and secure. Shareable. Mashable. Highly mobile, simple and convenient to use and manage. Your device. Your terms and conditions.
Did I say credit card? I’m sorry. I meant to say personal computing device. Your PC. (Or, if you’re like me, your Mac.).
Just musing. On a Saturday Evening :-)