Can smart cards bypass mobile? (mobilepaymentstoday.com)

Catherine Johnston
President and CEO, ACT Canada

Are smart cards getting smarter? Will they leapfrog mobile for payment and other apps?

Are you shocked by the question? Whether you are or not, you'll likely be shocked by the answer. Secure chips, whether on plastic or in phones will always get smarter — no shock there. Smartphones are here to stay and will be used increasingly for payment — no shock there. Now sit down, because here comes the shock.

Chip cards can now do what smartphones can do — allow financial institutions to issue new applications to their existing card clients, without having to reissue the card or require the cardholder to come into a branch. It happens using over-the-air provisioning.

This is the holy grail of multi-application cards. The prior inability to do this on a card was why smartphones were a logical move for payment apps. However, the ability to securely download apps to a consumer's card has been demonstrated. Why is this important to a market that is already moving toward mobile payment?

For one thing, we have a card infrastructure already in play where business cases, security, privacy, consumer and merchant acceptance are all part of the payment fabric.

This may be the first time that legacy infrastructure (i.e., the smart chip) becomes the disruptive technology. How will the market shapers leverage this development? Many will do it profitably.

This is one more reason why EMV chip cards need to move into the U.S. market. FIs should be taking this new functionality into account as they make EMV-related decisions.

As for consumers … they don’t want to get rid of cards; they just want fewer of them in their wallets. This is an opportunity for FIs to issue card apps that can differentiate them from their competitors, and increase the stickiness of their relationships with their customers.

This is also an opportunity for merchants who want to issue loyalty apps that would sit on other issuers’ cards. Today, some merchants find themselves in the position of being reluctant issuers. They want a loyalty app but have no option other than to issue their own card.

ACT Canada’s Multi-app Issuance Strategic Leadership team is currently planning a trial that could see transit fares, campus card applications and payment all on one card.

Now that technology supports it, multi-app will need to face the “partners” challenge. Building business cases, determining the right combination of apps, deciding who is responsible for what part of the process and getting everyone’s lawyers to approve the contracts sounds daunting, but doesn’t need to be.

After all, that is what we have already done for mobile apps.