Why it's time to kiss plastic cards goodbye in the UK

The United Kingdom has one of the world’s largest and most influential economies. Over 66 million citizens of Britain share the GDP of around $3 trillion, making them some of the biggest spenders globally. Many internationally successful companies and trends were born here which gives the country particular significance. It was one of the first developed nations where cashless plastic card payments became popular in the 1990s. It was a big-time for the British banking industry, however, the time of plastic cards might have come to an end. 

How did we get here? 

Plastic cards, which today are already considered outdated, were not a thing not long ago. Even physical money - cash had to be born for a list of specific reasons. Before the invention of money, as a universal means of payment, people had a different approach to the process. Services and products were exchanged among the members of the commune. It successfully served the purpose for a long time, but when the world became more global, the need for more convenient methods arose. To trade goods between different groups, the universal payment method was needed. That is exactly how the first metal coins were invented. At first, they were made either from gold or silver to highlight their value. However, as money became more widely used, precious metal coins became simply metal coins. This was followed by the introduction of paper banknotes. The primitive ones were very basic pieces of paper with the value indicators on them. However, due to safety concerns and possibilities of crime, layered security systems were introduced and advanced for them. 

Whether we are talking coins or paper banknotes, cash, physical money remained unchanged for thousands of years. Despite their development, the system maintained its principles and worked the same way for a long time. This changed in the mid 20th century when the first plastic cards were introduced in 1950. This was a credit card, a completely innovative technology for that time. Later in 1966, the world’s first debit card was launched as well. However, neither one of them gained popularity until the 1990s. This was the era of credit cards and international phone calls. Cashless payments became widespread in the United States first, followed by other developed nations later, including the United Kingdom. From that period, plastic cards have become a part of our reality. We pay and get paid using them. Having one is almost a necessity for a modern human. 

One other thing that the global spread of the internet brought is online shopping. Yes, the talk is about web stores where almost anything can be purchased. However, mentioning online trading is also important. On Forex trading platforms, anyone is able to purchase, sell or exchange currencies. They have become so popular that authorized FCA Forex brokers are quite common these days. Plastic cards also played a crucial role in shaping the trading platforms online, as a means of payment. However, the birth of cryptocurrencies has already reduced their importance in the field. 

Debit and credit cards also developed over time. At first, they were not made of plastic at all. Paper cards introduced in the mid 20th century were probably quite inconvenient with today’s standards. Plastic cards as we know today were brought to sunlight in the 1990s. However, changes in other aspects than the design were also made. The security and safety of cards have increased importantly and improved services, such as contactless cards were introduced. Such cards are widely used today and are able to perform transactions without physically touching POS terminals, thanks to the NFC technology. 

What is the future of plastic cards? 

It is true that the majority of transactions at small convenience stores still happen in cash. However, on the other hand, the larger picture in Britain is different. Card payments in the United Kingdom overtook cash for the first time in 2018. This showed the massive demand for cashless financial services and once again indicated how close the cashless future is. It is expected that less than one in every 10 transactions will be performed in cash by 2028 in Britain. Moreover, the number of people using contactless payment methods has been increasing steadily among all age groups across the nation for quite some time now. Some would imagine that the popularity of contactless would only be so significant in London or other major cities, but the evolvement of technology has reached every corner of the country. Now more people in South and East Anglia use contactless than in the capital. 

Amid the increasing popularity of contactless payments, technological advancement is taking the industry to another level and it might be the right time Britain says goodbye to plastic cards. Fintech is the term that is often heard through mainstream media today. It is a combination of two words - financial and technology. This field of the financial industry is not actually as new. It was born along with the first plastic cards in the 1950s. However, the field was first acknowledged and labeled in the 200s. Fintech is one of the fastest-growing industries globally.  It helps the financial industry adapt to modern demands in a timely manner. Thanks to the work done by the players in the fintech field, banking is more convenient, modern, fast and smart than ever before. 

If you are a user of a commercial bank, of which the chances are rather high, it probably has a mobile banking app. Online and mobile financial services are replacing physical branches without much disruption. They are much safer, faster and more convenient. One can perform a transaction through their phone within seconds, even internationally. 

However, the main reason why plastic cards are soon to be gone has to do with one specific technology we have already mentioned. The NFC or Near-field communication is what made plastic cards contactless. Mobile manufacturers recently realized that NFC technology can have great use for their phones as well. As a result, a number of mobile payment systems arose in the mid-2010s. Some of the most notable are Apple pay, Google pay and Samsung pay. There is no need to have a card on you anymore as the only thing required is your mobile phone. In 2016, over 16% of the adult population in the United Kingdom were using such payment methods.

With Generation Z being the biggest spending age group we have ever witnessed, the demand for digitalized payment methods will keep soaring. Young people love the convenience and care about their time. As a result, the financial industry needs to adapt quickly to maintain or profit and during this process, plastic cards will probably slowly disappear.