It’s hard to believe that the modern credit card is, for all intents and purposes, less than 50 years old. Today, just about every business accepts credit cards, from department stores to fast-food restaurants to gas stations. Over the past few decades, we’ve seen a relatively consistent path when it comes to payment processing.
The Internet, however, has dramatically changed the landscape. In the past 15 years, credit card companies have to find new ways to allow merchants to conduct transactions, with a large number of those transactions happening without a physical card swipe. And today, payment processing is still in a state of change.
Consider some of the following trends, and how they’re likely to change the face of payment processing over the next decade:
- Fewer merchant accounts.
While more and more businesses are signing up for merchant accounts, today merchant accounts represent a decreasingly proportionate amount of credit card transactions. Many websites use credit card processing gateways, for example, rather than a merchant account with a bank.
This trend is likely to continue, especially as larger gateways can leverage their size into better rates for customers. Even brick-and-mortar stores are in many cases moving toward using gateways rather than having merchant accounts of their own.
- Mobile payment processing.
Increasingly, businesses need to be agile. They need to be able to accept credit card payments remotely. Whether it’s a sales representative visiting client sites or whether it’s the pizza delivery guy, mobile payment processing is becoming increasingly in demand. This demand is only likely to grow.
Today, the technologies that support mobile payment processing are typically smartphone-based. It’s hard to say whether that trend will continue, or whether we’ll see more mobile card-swiping devices pop up in the marketplace.
- Increasing security.
The standards developed by the credit card industry have done a fair job of keeping financial information secure. However, the system isn’t perfect.
Over the next decade, we can expect even tighter security measures when it comes to the technology surrounding credit card processing. Major security breaches like those that have made it into the news recently are likely to increase, causing the industry to toughen up its security protocols.
- The decline of physical cards.
For more than a decade, some have predicted that the plastic/magnetic strip credit card would soon be a thing of the past. Many other technologies are cheaper and more efficient, and any one of them could replace physical cards.
Yet, this hasn’t happened and isn’t likely to. Instead, what we’ll see is more and more electronic use of credit cards via technologies like Google Wallet and others. Consumers will continue to be issued physical cards, but their use is likely to decline.
The credit card processing arena is in a state of flux, and likely will be for some time. What this means for businesses is that it’s essential to keep on top of your credit card processing contract, and make sure you’ve really got the best terms and rates for the type of business you run.
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