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Smart Credit Card Advertisements

Updated: Apr 6, 2018

In the recent Mobile World Congress 2018, Dynamic Inc launched its smart payment card. Smart payment cards allows users to store multiple debit and credit cards and use it at any retailer or for online transactions. The company has reinvented the smart card allowing banks and marketers to send marketing messages directly to the their cards.

Why Did Other Smart Cards Fail?

The concept of a smart payment cards is not new. There have been many startups like Plastc, Coin, Swyp and Stratos who have tried and failed. So, why have these smart card startups failed?

Firstly, for a smart card to be universally adopted, it has to work ubiquitously with all credit card issuers and at all merchants. When Coin first launched its smart cards, consumers could not successfully swipe their cards at many point-of-sales (POS) terminals. And to make matters worse, the cards did not have an EMV chip even though it was released in the industry that same year.

Secondly, these smart payment cards had to be managed with a mobile app and an external card reader. When digital wallets (e.g. Apple Pay) were launched in the market, it offered a simpler and fuss-free solution to payments. As a result, many smart card companies folded before even producing their first smart payment cards.

Finally, mobile wallets were free, while smart cards like Plastc charged $180 for the device and an 18-month subscription and a $50 annual fee. Its clear consumers will pick the free option. With advertising revenues, Dynamic's smart card can be provided free to consumers. But will Dynamics' Wallet Card be an effective advertising platform?

Is There A Market For Smart Payment Cards?

According to Dynamics, there are currently 20 billion cards in the world and the number is growing by 5% each year. But is it really growing? In a research by WorldPay, the market share of credit and debit cards is expected to shrink from 42% in 2016 to 23% by 2021. In contrast, the market share of eWallets is estimated to increase from 18% in 2016 to 46% by 2021.

Ironically, some eWallet and P2P payments brands like Square Cash, Apple Pay and Venmo have moved in the opposite direction by introducing prepaid card plastics. Why? Today, 90% of retail sales is still made in physical stores. These eWallet providers are using prepaid cards as a marketing tactic to bridge the gap between online and physical stores. Will eWallets eventually change consumer behavior and make card plastics obsolete (including smart cards)?

What Does It Mean For Marketers?

With the growing penetration of eWallets like Alipay, Tenpay and PayPal, marketers are better off spending their marketing dollar on channels like Display Marketing.

Although marketing on smart payment cards might sound promising, but as the use of physical cards decline, your reach will dwindle over time.

And with increasing consumer protection regulations in some markets, the need to include opt-out features on smart cards will further limit its effectiveness. With sharper targeting and increasing reach, Display Marketing placements in eWallets is a more effective alternative compared to smart cards.

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