It may seem at first glance that credit cards are no font of innovation. Cards are issued, cards are lost and cards must be cancelled, often to the headache of consumers and issuers alike. And in the latest Topic TBD, between PYMNTS’ Karen Webster and Aaron Frank, Final’s CEO, it was noted that innovation typically is confined to rewards and offers and the incentives that can be sweetened to get cardholders to spend at merchants.
But the conversation that needs to happen, said Frank, is one that must consider that “when you look at credit card innovation, it’s not driven by the banks … but by the core processors” such as FIS and Fiserv.
The big card issuers such as Chase, he said, really have only a few variables with which to play, such as how many points they will reward (for buying activity such as travel, or, in another vein, card issuers can save manufacturing costs tied to printing new cards by outsourcing that activity.
Truly innovating, he said, with a platform mentality that mirrors the Apple and Ubers of the world is hard to do with credit cards, which are stuck with legacy thinking and technology.
Final sees innovation as being driven by what consumers ask for – differentiators and features that truly set a product apart. A parallel to this is example is consumers choosing a particular phone ecosystem over another.
For credit cards, where nothing really has changed, Frank agreed, a feature could be a different rewards proposition. He said that his firm had sought to go back and add, through its own software, feature functionality to the core credit card product that promotes ease of use and convenience. Software can enrich the consumer experience —but that convenience take precedence over rewards — “the time value of money” counts, as Frank noted.
This can translate to issuers and consumers, where cards compromised by fraud or theft can be mitigated using individual card numbers that can be switched on or off, in a nod to both safety and convenience.
The convenience, he continued, also offers a nod to the fact that “the phone is the new wallet” as Apple Pay and other platforms can embrace cards through use cases such as international travel, for example.
Final, said the executive, interacts with consumers through email, because that is where they interact with their phone most often, thus creating a “digital credit card service” that is where the consumer wants it to be.
Final exists, in fact, as a line of credit as might be extended by any other credit card company, but also as a mobile app via online platform.
A dashboard helps create separate card numbers and one-time-use numbers or merchant-specific ones. In this manner, a user can set up a “Netflix card or a Geico card” that attends to payments for each of those relationships, and Final “is creating a one-to-one relationship between you and the payment or you and the merchant … We are the first digital credit card on the market.”
When queried by Webster as to how consumers are reacting to and embracing the “one digital card but many subaccount” models, Frank stated that “you already do this with payments already… every time you have an authorized user or multiple [people] on top of the same account …. We solve the fat wallet problem.”
The user base spans from 18 to 80, and the premise is that this is a segmentation of the same line of credit that is extended, said Frank.
When a card must be cancelled, it is simply a matter of switching off that account rather than individually dealing with each account — a boon when it comes to dealing with theft or loss of a wallet. And, noted Frank, larger issuers are not able to duplicate the system architecture (without outsized time and investment) that Final has, which offers the latter some insulation from competition.
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