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Digital payments won’t kill off credit cards

The digitalisation of payments may be accelerating at an eye-watering pace, but that hardly means the days of plastic cards are numbered, writes CHRIS WOOD of Nedbank

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The digitisation of payments is accelerating at an eye-watering pace, which, in all likelihood, means that the days of plastic cards may be numbered. But using this digitisation trend to justify a belief that credit cards, as such, will not be around for much longer is a somewhat misguided approach. One that demonstrates a misunderstanding of what credit cards actually are, and why they remain one of the most popular ways of transacting across the world. In fact, a 2018 TransUnion Industry Insights report revealed that the popularity of credit cards as a payment mechanism is still rising, with a 2.6% increase in the number of credit card accounts between the first quarter of 2017 and the first quarter of 2018.

Against that backdrop, it’s very unlikely that the physical plastic form of today’s credit cards will be making an exit from wallets and purses around the world anytime soon. Apart from the convenience and security of having a physical card to pay with, it still gives most consumers a sense of comfort in that it is a tangible representation of the money they have. In the past, cheques fulfilled this role for many people, but now that they are effectively dead and buried, and people’s interactions with cash is typically very fleeting, the plastic card is the only long-term, physical representation that people have of their relationship with their money.

So, while digitised credit payment methods offer even more convenience and transactional flexibility, the actual card is something that can be physically handled. Much like the fears of e-readers causing the demise of printed books are yet to be realised, it is going to take a significant amount of time for consumers to get comfortable with the fact that they don’t need a piece of plastic to tap, swipe, or insert into a point of sale machine to make a purchase.

Then there’s also the merchant part of the equation. A wholesale shift away from the use of physical plastic requires the full buy-in of retailers and service providers which, in turn, will require a significant mindset shift from the cashiers who are manning the register and accepting payments. Perhaps understandably, therefore, there is a measure of reluctance by merchants, many of who have only recently come to grips with remote POS devices, to throw their weight behind a move to cardless digital payment methods.

Of course, this relationship that people have with their physical credit cards is steadily changing, particularly amongst younger consumers. Most of these new generation consumers have also grown up with mobile technology as a core part of their lives, meaning that they are entirely comfortable using an app on their cellphone to pay for a purchase. In fact, they are likely to feel more at ease with digital, or virtual, payment methods than they are with physical ones like cash and cards.  A good example of these changing consumer dynamics can be seen in the speed with which the majority of, predominantly young, people have embraced contactless card payments, like tap to pay. These types of advances in payments that require little to no interaction with payment devices will undoubtedly pave the way for entirely cardless, mobile technology enabled transactions sometime in the future.

Ultimately, a fast-growing need for mobility and flexibility of payments will drive the evolution of credit payment transactions and, in all likelihood, lead to the eventual disappearance of plastic cards entirely. When that day might come is, of course, anyone’s guess. But irrespective of if, or when, plastic credit cards do become obsolete, the onus remains firmly on financial institutions to understand that the concept of credit cards has very little to do with the actual plastic card, and everything to do with the customer need for convenient, secure and instant payment mechanisms.

For us at Nedbank, this understanding has always underpinned the design and delivery of all our payments channels. While cards are a physical manifestation of one of the many transactional methods we offer our clients, our goal is to ensure that consumers have access to a vast and diverse payments ecosystem wherever they are in the world, and from which they can select the methods that best suit their unique needs and preferences.

So, no matter what form credit cards take in the future, most people will still always require credit in one form or another to meet their needs – the primary one being the need to be able to make payments wherever they are, whenever they need to, secure in the knowledge that their bank is there to enable and support the transaction.

As such, Nedbank cards are provided on a robust, secure, and proven payments infrastructure to facilitate trusted and convenient payments. Whether these payments are made using a piece of plastic, a cellphone, a digital payment platform like Nedbank scan to pay or some other piece of futuristic technology, is neither here nor there. All that matters is that our customers know that we are always there for them and they can rely on us to meet their payment needs.

Ultimately, that’s all that any person making a payment desires. And for the financial institution that can fully understand that, and innovate to deliver solutions that meet, and exceed, the payment expectations of consumers, the evolution of credit cards and payments is not a scary prospect, but rather a very exciting opportunity to deliver for their clients, enhance their brand and expand their success.

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Tech promotes connections across groups in emerging markets

Digital technology users say they more regularly interact with people from diverse backgrounds

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Smartphone users – especially those who use social media – say they are more regularly exposed to people who have different backgrounds. They are also more connected with friends they don’t see in person, a Pew Research Center survey of adults in 11 emerging economies finds.

South Africa, included in the study, has among the most consistent levels of connection across age groups and education levels and in terms of cross-cultural connections. This suggests both that smartphones have had a greater democratisation impact in South Africa, but also that the country is more geared to diversity than most others. Of 11 countries surveyed, it has the second-lowest spread between those using smartphones and those not using them in terms of exposure to other religious groups.

Across every country surveyed, those who use smartphones are more likely than those who use less sophisticated phones or no phones at all to regularly interact with people from different religious groups. In most countries, people with smartphones also tend to be more likely to interact regularly with people from different political parties, income levels and racial or ethnic backgrounds. 

The Center’s new report is the third in a series exploring digital connectivity among populations in emerging economies based on nationally representative surveys of adults in Colombia, India, Jordan, Kenya, Lebanon, Mexico, the Philippines, Tunisia, South Africa, Venezuela and Vietnam. Earlier reports examined attitudes toward misinformation and mobile technology’s social impact

The survey finds that smartphone and social media use are intertwined: A median of 91% of smartphone users in these countries also use social media or messaging apps, while a median of 81% of social media users say they own or share a smartphone. And, as with smartphone users, social media and messaging app users stand apart from non-users in how often they interact with people who are different from them. For example, 52% of Mexican social media users say they regularly interact with people of a different income level, compared with 28% of non-users. 

These results do not show with certainty that smartphones or social media are the cause of people feeling like they have more diverse networks. For example, those who have resources to buy and maintain a smartphone are likely to differ in many key ways from those who don’t, and it could be that some combination of those differences drives this phenomenon. Still, statistical modelling indicates that smartphone and social media use are independent predictors of greater social network diversity when other factors such as age, education and sex are held constant. 

Other key findings in the report include: 

  • Mobile phones and social media are broadening people’s social networks. More than half in most countries say they see in person only about half or fewer of the people they call or text. Mobile phones are also allowing many to stay in touch with people who live far away: A median of 93% of mobile phone users across the 11 countries surveyed say their phones have mostly helped them keep in touch with those who are far-flung. When it comes to social media, large shares report relationships with “friends” online who are distinct from those they see in person. A median of 46% of Facebook users across the 11 countries report seeing few or none of their Facebook friends in person regularly, compared with a median of 31% of Facebook users who often see most or all of their Facebook friends in person. 
  • Social activities and information seeking on subjects like health and education top the list of mobile activities. The survey asked mobile phone users about 10 different activities they might do on their mobile phones – activities that are social, information-seeking or commercial in nature. Among the most commonly reported activities are casual, social activities. For example, a median of 82% of mobile phone users in the 11 countries surveyed say they used their phone over the past year to send text messages and a median of 69% of users say they took pictures or videos. Many mobile phone users are also using their phones to find new information. For example, a median of 61% of mobile phone users say they used their phones over the past year to look up information about health and medicine for themselves or their families. This is more than the proportion that reports using their phones to get news and information about politics (median of 47%) or to look up information about government services (37%). Additionally, around half or more of mobile phone users in nearly all countries report having used their phones over the past 12 months to learn something important for work or school. 
  • Digital divides emerge in the new mobile-social environment. People with smartphones and social media – as well as younger people, those with higher levels of education, and men – are in some ways reaping more benefits than others, potentially contributing to digital divides. 
    • People with smartphones are much more likely to engage in activities on their phones than people with less sophisticated devices – even if the activity itself is quite simple. For example, people with smartphones are more likely than those with feature or basic phones to send text messages in each of the 11 countries surveyed, even though the activity is technically feasible from all mobile phones. Those who have smartphones are also much more likely to look up information for their households, including about health and government services. 
    •  There are also major differences in mobile usage by age and education level in how their devices are – or are not – broadening their horizons. Younger people are more likely to use their phones for nearly all activities asked about, whether those activities are social, information-seeking or commercial. Phone users with higher levels of education are also more likely to do most activities on their phones and to interact with those who are different from them regularly than those with lower levels of education. 
    •  Gender, too, plays a role in what people do with their devices and how they are exposed to different people and information. Men are more likely than women to say they encounter people who are different from them, whether in terms of race, politics, religion or income. And men tend to be more likely to look up information about government services and to obtain political news and information. 

These findings are drawn from a Pew Research Center survey conducted among 28,122 adults in 11 countries from Sept. 7 to Dec. 7, 2018. In addition to the survey, the Center conducted focus groups with participants in Kenya, Mexico, the Philippines and Tunisia in March 2018, and their comments are included throughout the report. 

Read the full report at https://www.pewinternet.org/2019/08/22/in-emerging-economies-smartphone-and-social-media-users-have-broader-social-networks.

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Nokia to be first with Android 10

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Nokia is likely to be the first smartphone brand to roll out Android 10, after its manufacturer, HMD Global, announced that the Android 10 software upgrade would start in the fourth quarter of 2019.

Previously named Android Q, it was given the number after Google announced it was ditching sweet and dessert names due to confusion in different languages. Android 10 is due for release at the end of the year.

Juho Sarvikas, chief product officer of HMD Global said: “With a proven track record in delivering software updates fast, Nokia smartphones were the first whole portfolio to benefit from a 2-letter upgrade from Android Nougat to Android Oreo and then Android Pie. We were the fastest manufacturer to upgrade from Android Oreo to Android Pie across the range. 

“With today’s roll out plan we look set to do it even faster for Android Pie to Android 10 upgrades. We are the only manufacturer 100% committed to having the latest Android across the entire portfolio.”

HMD Global has given a guarantee that Nokia smartphone owners benefit from two years of OS upgrades and 3 years of security updates.

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