While the technology that powers them has been upgraded many times over the years, the basic look and feel of credit cards hasn’t evolved much. But that may be starting to change as the next generation of cards moves away from swipeable magnetic stripes and toward a vertical layout to better reflect how most people use them: by tapping.
From the old way of carbon copying an account number and having a customer sign off on a purchase through to the advent of magnetic stripes and the chip-and-pin systems of today, the act of using a credit card hasn’t changed much over the last 50-odd years, even as the technology under the hood has.
But that seems to be changing as card providers and issuers are moving away from the style of card that IBM engineer Forrest Parry is credited with inventing in the 1960s and toward something a little more modern.
The most obvious shift afoot today turns the familiar wallet-shaped horizontal credit card on its side and adopts a new vertical configuration that’s faster and easier to use.
Cowyk Fox, an executive with South African bank Absa, explained the rationale for why it’s happening.
“Think about how you use your card when you make purchases,” he said. “When you hand over your card to a cashier, tap it to make contactless payments or dip it into a point-of-sale machine, you’re likely holding it on the short end, vertically,” Fox said.
Portrait orientation makes it easier to tap
The vast majority of credit card transactions today happen either online, where no physical card is involved, or using chip-and-pin technology, or tap-to-pay contactless systems. But those transactions are still happening on infrastructure built for the previous generation of swipers, so the industry is upgrading itself to keep up with consumer tastes while beefing up security behind the scenes.
“A portrait orientation [is] easier to tap,” MasterCard Canada’s vice-president of digital products Suhkmani Dev told CBC News in an interview. “From a user’s standpoint, it’s good design for many reasons.”
Although consumers typically think of themselves as owing money to the brand on their card, the debt is held by whoever actually provides the card, with MasterCard, Visa or Amex merely processing the transaction.
That’s why Dev says MasterCard doesn’t consider itself to be a credit company or a card company but is actually in the “payment technology” business.
“Everything we do from a standards perspective or a design perspective is to enable choice and payments seamlessly and securely,” she said.
Magnetic strip is on its way out
Instagram-style portrait-mode orientation for cards may add a dash of design pizzazz, but the real reason for the shift is what’s happening on the back end, where tap-based vertical cards go a step beyond what’s possible on older systems.
Unlike swipe cards, tap-enabled cards are backed by a technology that Dev calls “tokenization” because the identifying information being exchanged in a transaction is unique for just that one transaction, making it much harder for a fraudster to intercept any data that would allow them to compromise an account and use it again and again.
“If you lose your card, instead of your Netflix being cancelled, we replace that sensitive 16-digit card information with a unique identifier, which the merchant can still use to do a transaction on, but it’s not your actual 16 digit number,” she said. “It’s dynamic.”
Partly because of a pandemic-fuelled desire to avoid touching things wherever possible, Visa’s contactless credit card transactions increased by more than a billion globally in the first quarter of 2021 compared to the same period a year before, according to Visa.
MasterCard phased out the requirement to have a signature to verify transactions years ago, and the company says it’s time for magnetic strip to go, too. Starting in 2024, all new MasterCards cards will no longer have a magnetic strip component to them, and the company expects the technology to completely disappear within a decade.
There are already cards with biometric technology out there, so instead of a signature or familiar swipe, don’t be surprised if your next credit card asks you for a thumbprint.
Beyond security, the shift to new styles of cards is an acknowledgement that the digital world is playing a bigger role than ever in consumer spending patterns.
Iconic Canadian retailer HBC released a vertical credit card this year, one that comes with all the bells and whistles that customers have come to expect in terms of things such as reward points and fees but also incorporates technology such as facial recognition for the digital wallet version, which turns a user’s smartphone into not just a virtual tap-enabled credit card but a physical one, too.
All HBC stores are in the process of being upgraded to accept contactless payment options, the company said in a press release.
When Apple released its much-ballyhooed credit card in 2019, the physical card was essentially an afterthought as all the functionality of the card was built into the customer’s Apple Pay-enabled devices. If someone wanted a physical card, they had to request one.
Data from debit card company FirstData shows that consumers with tap-to-pay cards tend to use their credit card about 25 per cent more than other cardholders, and spend more than a quarter more on them, too.
Improvements for accessibility
There are other advantages, too. Global bank HSBC launched a vertical card this summer that was lauded by various accessibility groups because it has raised tactile dots for people with visual impairment, labels indicating which way to use the card and larger font sizes to ensure card details are easier to read.
“Even something as simple as knowing which way around the card goes can become a real challenge,” British Alzheimer’s Society spokesperson Morven Lean said of the cards.
“These accessible cards are an important step to ensure people living with the condition feel supported and treated as equal members of society.”
It’s that desire to keep up with the times and better service customers that explains why the industry is always adapting, Dev says, which is why MasterCard thinks the best credit card is the one the customer barely notices.
“No one wakes up in the morning thinking about how they can’t wait to use their card,” she said. “So we’ve constantly innovated in the physical card design space … moving toward what design actually works.”