Contactless payments may be going up, but the credit cards market competition will continue to be hot. Factors like emerging market growth in credit card adoption and new advanced digital capabilities, such as digital loyalty schemes and instant issuance of cards, are leading the growth.
Read more: Contactless & cashless FinTech to flourish in emerging economies in APAC
Virtual cards face tough competition from other payment methods, such as traditional contactless cards and QR codes, the US alone accounting for $71 billion in B2B virtual card revenue by 2027; representing 72% of global revenue. However, a study anticipates that the secure nature of virtual cards will drive demand in an increasingly security-conscious market.
Credit cards aren’t really going away yet, especially because of emerging markets. In February, a Juniper Research study found that credit cards will account for over US$9.7 trillion in spend globally by 2027, offering a sizeable opportunity for card issuers to up revenue growth by choosing an optimal credit card strategy.
It found that rising affluence in emerging markets will be a significant driver of credit card adoption. This means that digital card issuance platforms are critical to delivering credit offerings in these mobile wallet?dominated markets.
In emerging markets, the ability to instantly issue digital cards will be a key factor in users choosing credit cards over other payment methods. Card issuance platform vendors must ensure localisation to enable cards to be quickly pushed to the wallets popular in each market
Nick Maynard
Research co-author Nick Maynard explains, “In emerging markets, the ability to instantly issue digital cards will be a key factor in users choosing credit cards over other payment methods. Card issuance platform vendors must ensure localisation to enable cards to be quickly pushed to the wallets popular in each market.”
According to another study the global number of virtual card transactions via mobile payment methods will grow from 5 billion in 2022 to 53 billion in 2027, as the adoption of virtual cards in contactless payments accelerates. It says that including virtual cards as a major market driver of consumer adoption of contactless payments in fast developing economies like India allows them to meet market demand for convenient payment options during checkout amongst unbanked populations.
For example, Ubona Technologies, an Indian speech recognition company has conceptualised and created 123 UPI, a first of its kind speech recognition technology based payments solution that enables users with any phone (feature phone/smartphone) to make digital payments in their preferred Indian language. This solution uses Automatic Speech Recognition Engine to help people to transact in their preferred Indian language thereby enabling people to engage in digital payments in their mother tongue.
In February, a study found that the number of credit cards issued via digital card issuance platforms will cross 321 million globally by 2027, from 120 million in 2023. This growth of almost 170% reflects the use of new advanced digital capabilities, such as digital loyalty schemes and instant issuance, as card issuers aim to combat competition, including buy now pay later.
Digital card issuance platforms allow card issuers to create cards using an API-driven approach, so that cards are delivered instantly to digital wallets, with the option for a physical card, boosting flexibility significantly.
The research predicts that by 2027, credit card adoption will continue to rise causing the monetary value of rewards for users from credit card use to reach $103 billion globally.
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