Numberless Cards – Is It the Future?

The cashless payment economy is booming worldwide as people increasingly use their digital wallets and payment apps on smartphones to make purchases rather than swipe their bank cards or pay with currency notes.

It is estimated that in 2020, more than 1 Billion people will make payments at a store with their smartphones globally every six months. With physical contact being much discouraged at every level due to the COVID-19 pandemic, the cashless payment trend is expected to grow even bigger and draw more interest from customers worldwide.

Riding on the growth of cashless payment systems worldwide and a need to make them averse to rising security threats, a unique digital payment solution has been witnessing great traction in recent years. It is none other than Numberless Cards, which is similar to a normal credit or debit card but without any numbers inscribed on it. All data, including card number and user details, are securely encrypted into the embedded EMV chip found on the card, and the surface of the card only has a branding of the card issuer. This makes it less prone to any security vulnerability if owners lose the card, and it ends up in the wrong hands because criminals won’t be able to do anything with it.

Why are the numbers removed?

Card fraud and losses are a big issue worldwide.In 2018, approximately USD 27.85 billion were lost worldwide due to card fraud incidents, which roughly amounts to a loss of 6.86 cents on every 100 dollars spent with cards.

One of the most common ways of card fraud involves criminals accessing information such as card number and CVV and then tricking card owners into revealing pin numbers or one-time authentication passwords sent via SMS for fraudulent transactions using the card. When numbers are removed, and all data is securely encrypted in the EMV chip on the card, there is no way for fraudsters to identify your card number and then perpetrate a scam to get hold of your authentication credentials.

So how do numberless cards work?

For beginners, numberless cards do not require the store merchants to use any new machine to process payments. It works seamlessly on all existing card processing machines that can read data from EMV chips embedded in cards. One can simply enter a pin to authenticate the transaction at the merchant outlet. This pin is usually for a one time use and is generated by an app on the user’s smartphone, which is linked to the card issuer’s network for authentication. The app can also be used to deactivate the card if it is stolen or lost, and a new one can be instantly requested and activated. All transactions made with the card can be tracked and managed using the connected app. In many countries, users do not even have to carry the physical card to swipe at the payment counter as their smartphones can act as the card if they have the necessary NFC capabilities enabled and a trusted service provider’s app installed like Apple Pay, Samsung Pay, etc.

What the future holds for numberless cards

Nearly every major economy worldwide is witnessing a growing number of fintech and banking businesses launching innovative numberless payment card services. As the ecosystem grows, the benefits of owning a numberless card become more attractive for customers as competition keeps charges low and services more lucrative.

Here are three reasons why numberless cards hold the promise of being the future of the card payment industry:

Convenience

Most numberless card providers allow users to procure a payment card without even having to open a linked bank account. The hassle-free payment experience with the added feeling of security of not having to worry about identity theft makes it a more preferred choice for today’s digital-savvy consumer base.

Leading Spanish bank Banco Santander, which has recently joined the list of providers for numberless card services, has pointed out that its numberless card reduces the risk of fraud by over 90%.

Growing Ecosystem

As more consumers subscribe to such innovative fintech services, service providers are able to negotiate better rates with processing networks like Visa and MasterCard and pass the benefits to both consumers and merchants that accept such payments. In fact, more merchant establishments now offer greater flexibility for payments like accepting smartphone payments in place of card swipes.

Forbes reports that in the US alone, nearly 70% of all establishments accept smartphone payments, with the number rising to nearly 99% in countries like Australia.

Regulatory Support

While Western nations have long been supportive of digital payments, a vast majority of the world population was largely involved in cash transactions for their needs. However, some of the world’s most populous countries like China and India, have rapidly popularized the cashless economy concept in recent years. The governments in these nations are offering incentives and sops to encourage technology companies as well as banks to offer more convenient digital payment solutions like numberless cards. At the same time, they are putting tighter norms and expensive tax tariffs for cash transactions. With more transactions becoming digital, it becomes easier for governments to monitor the financial proceedings of the country and control the flow of fake and black money that traverses mostly in cash.

Numberless cards are here to stay and are growing in popularity in all countries. They bring a lot of benefits to all stakeholders involved in the payment ecosystem and unifies efforts to thwart illegal and fraudulent financial transactions at a global level. As more tech companies and financial powerhouses join the list of growing service providers, the technology can expect more innovative growth trajectories. For example, Apple is making it easier for users to authenticate transactions with its Apple Pay app on their Apple Watch. If you are a financial service provider, numberless card payments should be on your most crucial bucket list for offerings in the near future for customers.

Debasis Mohanty

Debasis heads the delivery for all client engagements at Verinite. He has a long track record of delivering high quality, responsive, secure and cost-effective business and technology solutions in BFSI domain. Outside his work, he is an amateur animator, a sports enthusiast, a voracious reader and a Trivia buff.