By Ray Birch
BIRMINGHAM, Ala.—Will Visa’s new “one-card concept” garner quick adoption? One payments expert is not sure, stating the solution might face the same, slower-than-expected consumer usage as did digital wallets following their initial release.
As CUToday.info reported, Visa later this year intends to introduce the “one-card” concept via its Flexible Credential that enables a single, digitally issued card to “toggle” between debit, credit, pay-over-time options and cryptocurrency.
Visa has been promoting the innovation as a simple means to connect to multiple banking accounts, eliminating the clutter for consumers that results from segmenting and juggling various banks’ credit and debit cards as they conduct their daily financial lives.
“Visa is testing it overseas right now,” said Bill Hardekopf, CEO of BillSaver.com. “The Flexible Credential takes your debit card and your credit card and it gives you the ability, in one step, to have the transaction directed to either card,” Hardekopf explained. “It can even direct the transaction to buy now, pay later—and also crypto. It eliminates the need to carry different cards in your wallet.”
Hardekopf pointed out that many years ago payments analysts were talking about a very similar concept regarding paying with phones—digital wallets.
“And we said then that it's really not that big a deal to take out a credit card and swipe it. That is the same way I feel about the Flexible Credential,” he said.
What the Data Show
According to Hardekopf, the data show four out of every 10 people have tried, or are using their phone, to make payments.
Bill Hardekopf
“Which leaves six out of 10 who have not,” he said. “This sounds like to me Visa is trying to come up with another idea to control your payments, get ahead of Mastercard, American Express and Discover, and try and consolidate. It's probably a good move on their part to consolidate or come up with a way for you to put all of your cards in their platform. However, as I indicated, I just don't know how quickly something like this will catch on among consumers. I realize Visa is labeling this as a wonderful convenience. But it's not that inconvenient to pull out your card then swipe or tap it. I don't know how many people will flock to this.”
Hardekopf and other analysts have stated that Visa still needs to clarify how the Flexible Credential will work and when it will be rolled out in the U.S. Hardekopf added, though, he has read reports that indicate Visa will release the feature before the end of the year in the U.S.
“I read that the Flexible Credential is live in Asia, but I have not read anything about the adoption rate. What I have heard is Visa saying this is also well suited for underdeveloped countries,” Hardekopf said.
Who it Might Help
Will the Flexible Credential, with its ability to preset transaction amounts and types to route to specific payments vehicles make it a good budgeting tool, especially for lower-income Americans and the underserved?
“I think it can help some people who might not be able to control their spending,” he continued. “If you're making a large purchase, maybe you only do that with your debit card because that way you're not going to pay any interest, it could be helpful in that way.”
Despite being uncertain about consumer acceptance of the Flexible Credential, Hardekopf insisted this is not an innovation credit unions should ignore.
“Credit unions should always be following new trends,” he said. “And, with the Flexible Credential, just keep an eye on its usage. Going back to the digital wallet data, that four in ten have used that payment solution, 40% is still a big piece of the pie, and a good target to gain market share. If you're a credit union or a small banking institution I think you should keep your eye on this to see if usage increases and consumers move to it. You might want to start developing something similar or begin working with Visa to be part of this.”
Close Attention Expected
Hardekopf added that he believes Mastercard will be closely following the rollout of the Flexible Credential.
“Mastercard, American Express, Discover/Capital One will all probably all follow this closely and react accordingly and competitively,” he said. “We might end up seeing Mastercard introduce something very similar to this just to prevent people from switching from to Visa.”