Card software technology and its advancements

New technologies are opening the way for innovation in payments. This is even more the case in terms of how Card software technology is now able to work. Taking payments has never been so easy for the end user. Some notable companies are contributing to the transition to new highly secure payment technologies. The same too can be said of certain industries too. Literally millions of software applications are available to businesses of all types and making payment processes all the more easy in the process too.

Where it all began

While credit cards may be a modern-day invention, consumer credit itself is an age-old tradition. What started with farmers borrowing money for seeds and other things until the next harvest has now turned into a consumer-credit revolution. In 2018, there were 1.1B credit cards in circulation in the United States alone. This number is expected to increase to 1.3B by 2023. As you may be able to imagine, the need for a robust Card software infrastructure will only grow in importance. This is both for the end user and also for the companies that work as vendors of the technology.

This boom in credit card usage is partially attributable to the technological advancements that have made noncash payments convenient. Over the past six decades, various tech innovations such as the EMV chip, near-field communication (NFC) technology, and application program interfaces (APIs) have made credit cards and digital payments more and more the norm. This is now big business and every year there tends to be a new advancement; one of the most recent ones being Flat cards.

Some of the earliest cards that were issued by banks were check guarantee cards, which were plastic cards issued by banks as a guarantee of the creditworthiness of a depositor. Customers could present this card to a retailer, along with a check they wished to make a purchase with. There were even the days where there was what was once called a bankers draft. So much has evolved over time and will continue to do so.

The magnetic stripe

The next evolution in card payments was the magnetic stripe. The magnetic stripe, or magstripe, was a strip of iron particles on the back of a payment card, the magnetism of which could be modified to embed information. The magnetic stripe was first added to the back of a plastic card by IBM. From here it has since evolved and there has been no end of evolution in terms of how this has worked with a bank card. The magstripe card also allowed customers to be able to have a secure and convenient way to withdraw their money as and when required, especially outside of banking hours.

EMV chips

EMV stands for Europay, Mastercard and Visa, the three card issuers that came up with security standards to make card payments more secure. Prior to global EMV standards, every card issuer had its own security standards. This was definitely something of a game changer to how cards were used as a method of payment – the main method of payment.

Every card compliant with EMV standards comes with a chip, in addition to the magstripe. The chip contains a microcircuit, which stores the card and customer information in an encrypted form. The chip generates a unique transaction code for each payment that is initiated on the card. This dynamic nature of the information on the card, instead of the static information that was stored on a magstripe, makes it difficult to replicate a chip credit card. With this comes faster payments for the end user.

Point-of-sale systems for helping to process payments more effectively 

Visa was the card issuer to created the first PoS system in 1979. This was the predecessor of the credit card processing machines we know today. This machine was bulky and captured data electronically. Again, this too has now changed. There have been new advancements and these machines are now able to work a great deal more effectively. The payment process is so much more effective and efficient too.

These digital machines replaced the manual imprinters, capturing the information on a customer’s credit/debit card digitally. It sped up the transaction process significantly and made card payments more convenient for customers. Some PoS systems also had the ability to integrate with other business processes, such as tracking inventory and employee schedules.

Virtual and cloud-based PoS systems are now the new thing of today. This is very much the latest technology being seen in / across the industry and being seen and used by more and more vendors. These virtual PoS systems also allow merchants to track a customer’s loyalty-cards programs.

Payment gateways for online payments to work

In detail, Payment gateways are companies that act as a bridge between a merchant selling a product or service and a customer buying it. It is these gateways that have come into the picture after the advent of the internet and are a key component in the proliferation of e-commerce. So much of this has again developed as more and more stock-based businesses have resorted to selling their goods online. This has only got even more in demand in light of the pandemic and the changes in how many businesses have fast adapted to selling online. Payment gateways have been able to easily ensure that payment information was transmitted securely from the website that a customer was making a purchase on to the credit card network or the card issuer.

The next innovation that revolutionized card payments was near-field communication (NFC), which enabled contactless payments. Another technological innovation that is enabling quicker online and in-person payments is application programming interface (API). This is a software that allows two computer applications to communicate with each other.

Overall, the future is bright

By 2025, 67% of global transactions are estimated to be done digitally. This will be up from their 57% estimate prior to the COVID-19 pandemic. Of course there has been a brief slump though this growth is now coming back. It will grow fast in the foreseeable future as we go through the pandemic. Even as other sectors saw a downturn in consumer demand, owing to global lockdowns, an increase in online shopping and payments boosted demand in the payments industry. This boom in digital payments will also be accompanied by faster technological advancements.