For decades now, we have been slowly phasing out hard cash. Think about it, we went from paper money or coins to digital transactions over the internet and then to credit cards and debit cards and now everyone is all over cryptocurrency. If this trend is anything to go by then, it is logical to assume that credit cards will disappear at some point in the near future. We simply won’t need them.
But, as sound as that logic may be, these are things we have been using for decades (paper money has been around for over 500 years. It is safe to say that it will not simply go quietly into the night in a few years.
An Argument as to Why Credit Cards May Disappear Before Cash
More and more people, as well as businesses, are transacting online now; that’s billions of dollars being traded and transacted across the globe without people having to meet and hand over actual cash to one another. Three things have made this possible:
- Credit cards
- Cashless payment methods such as PayPal
- Crypto-currency
Although the viability of cryptocurrency is still in question as too many variables remain unaccounted for, there is no denying that this monetary phenomenon is quickly catching on, at least with the tech-savvy sections of the population.
What isn’t in question is just how insecure credit card transactions have become. That and the fact that cash-based transactions are just not efficient in a global economy.
Why Credit Cards are so Insecure
At the turn of the century, big financial institutions like Visa, MasterCard and other major players in the payment cards industry had a choice to make. Since the internet was still relatively young, they could either:
- Create a system that made it incredibly safe to use their credit cards online or
- Rely on just how “unguessable” those credit card numbers were
Unfortunately, they chose the latter option and put their eggs in the basket of unguessable numbers. At the time, this seemed like a foolproof strategy considering the fact that it would take extreme luck for someone to guess 16 digits in a row correctly and somehow get the correct CVV number attributed to that particular card.
But barely four years later (in 2004) online fraud became such an issue that these companies realized their original plan wasn’t working. So five of the major players:
- American Express
- Visa
- JCB
- MasterCard
- Discover
decided to do something about it and form the PCI SSC (Payment Card Industry Security Standards Council). In order to secure credit card numbers, this body produced the (Data Security Standard) with which every merchant accepting their credit cards had to comply. This cost money and that cost was passed on to the consumer.
Then 2005 came around and the biggest data breach of the time happened at Card Systems International where hackers stole 40 million credit card numbers and that brought a sharp focus on the deep flaw within the “trying to protect credit card numbers” strategy. But even without that breach, the effort needed to protect these numbers is just astounding:
- Call centers must make sure that their representatives are not memorizing or writing these numbers down
- Phone call recorders must cutout, so they do not capture card numbers with corresponding CVVs
- The servers storing these numbers must be audited annually
All this costs money (upwards of $50k a year), and it costs almost $1 million just to be PCI DSS compliant in the first place. And still, the system isn’t completely secure.
What’s the Alternative to Credit Cards?
The simple truth is this: even though credit cards may be insecure and even though they may be one of the factors that encourage debt in our society, they really are very convenient. Not only can you use them in emergencies, but you can also use them to build up your credit score or destroy it depending on how much you like living on the edge.
However, if you are not one to sit around and wait then here are some credit card alternatives that could come in handy once more and more businesses start phasing out credit cards:
PayPal Credit
Yes, a lot of people don’t know this, but PayPal can actually offer you a line of credit. The best part is that most businesses accept PayPal now and you do not have to worry about things like credit card skimming when dealing with a digital platform like PayPal. This is known as “alternative credit,” and it takes all shapes and forms but what is consistent is that it breaks away from traditional forms of credit in that these options are often more secure, technologically integrated, and more flexible than your regular card companies.
Cryptocurrency
While this form of currency is yet to be fully recognized by most governments, the list of companies accepting Bitcoin as a form of payment is growing daily. This list even includes huge brand names such as Microsoft, Expedia, and Whole Foods. Of course, there are still some challenges with this form of payment; the most concerning of which will be its volatile exchange rate, but as things stand, it is one of the most secure and efficient forms of payments on the web today.
Prepaid Cards
You could always try prepaid cards that you can load with the money you need to make your purchases. Operating on the same principles as a credit card, prepaid cards are considerably safer considering you cannot use more than you load on it. This means that should it get stolen or compromised; the hackers cannot go on a virtually unlimited shopping spree either.
It will take some time, even decades or maybe even longer, but credit cards will most probably eventually disappear from the market. They will be overtaken by cheaper, more secure and more efficient options. As things stand now, however, they are still one of the best and most convenient option for both online shoppers and international travelers the world over.
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