In a fairly unprovoked and rather unexpected statement, a senior executive for PayPal announced last week that their forecast shows that the use of traditional, plastic credit cards will likely be dead throughout most of the world within the next five years.
As outlined by Global Vice President Hill Ferguson, the adoption of smartphones by hundreds of millions of people in recent years has provided additional outlets for consumers to access their lines of credit without the need for a physical card, and it is no surprise that PayPal – one of the original leaders in online and global payment solutions – sees these trends unfolding.
In the developed world, around sixty percent of the population currently has access to a smartphone of some sort, which provides enough processing power for users to access a variety of services and mobile applications that can handle person-to-person payments, credit and debit card transactions and more.
With big names in the business like Google offering digital wallets as of late, more and more consumers have begun to combine these technologies with their spending habits. Many users currently only keep their debit cards stored in digital wallets, but the same techniques for credit card use are also currently available.
While some countries – most notably the United States – lag the rest of the developed world in regards to modern credit card technology, the transition from the status quo to a digital-only solution for payment processing will be far easier than what was seen in many European countries over the past decade, as fewer pieces of infrastructure will be needed to accompany the transition.
Some of the bigger names in the credit card industry, such as Visa, disagree with the assessment offered by PayPal's Global Vice President. Visa's Country Manager for Australia offered a different take, saying that physical credit cards will still continue to play a key role in financial transactions for many years. She did, however, acknowledge that digital payments will continue to become a larger percentage of all transactions. Contactless cards and NFC technology – both of which have and will continue to be embedded in both credit cards and terminals – are a couple of examples of how physical cards can continue to remain relevant for quite some time.