Why credit cards won’t exist in 10 years

Credit cards, in their current form, won’t exist in 10 years. “How” we pay for things won’t resemble how we pay for them today.

But I am going to work my way up to that point.

I was reading this article in the paper last weekend by Susan Saulny about the fact that lighthouses have become nothing more than ornamental tourist attractions.

It reminded me of an old (probably untrue) story about an overbearing Navy commander ordering someone in its path to change course or face getting run over.  Back and forth they went over the radio, “you change course!” “No, YOU change course” back and forth and then the final remark in the conversation was “this is a light house, your call.”

These days, with GPS and real time weather reporting, vessels don’t need the light of the lighthouse, they don’t need the fog horn, and they don’t need the nautical flags indicating wind conditions.  They are so outdated now, it borders on funny.

That got me to thinking about some of the things that didn’t even exist when I was little (I am 44):

E-mail

Fax

Overnight mail (FedEx)

Voice mail (telephone answering machines)

ATM

Home video (Betamax, to VCR, to DVD, and now streaming)

The list goes on and on, but the way we pay for things has also changed quite a bit.  Do you remember traveller’s checks and the old Karl Malden TV ads “Don’t leave home without them!”  Well credit cards were still a pretty new thing when I was little, and it was a pretty big deal to get one, especially an American Express card.

Today I get 3-5 letters a week asking me to sign up for this credit card and that credit card.  What that says about banks and consumer behavior is a topic for another day.

But I got to thinking, carrying around a physical piece of plastic with a little magnetic strip and poor excuse for a signature on the back is a pretty poor form of security and in the world of Purell Nation, having all of those other hands on our card, think of all of the germs on those cards . . . it’s almost as bad as the phones they supposedly never clean in hotel rooms (one more reason to love Skype).

So what’s the solution?What’s the future of payments?

Our mobile devices will be the “credit card” of the future.  You would “beam” some information to the merchant about yourself (it could even be your Paypal account – which, at a restaurant you could include in your OpenTable reservation and skip the “beam” step) they then transmit to you the amount you owe, you click some sort of “agree to pay” button and that’s it.  It would also ask you if you want to pay a gratuity, which you could also have pre-programmed to calculate percentages so you don’t have to do that math in your head after a glass of wine.  It’s easy to password protect cell phones, so if you lose it you aren’t going to get hijacked by whoever finds it.  The way things are going, we will be having mobile devices with us for a long, long time, and I really think it will happen swiftly that the credit card will become even less useful than a lighthouse.

-Ric

P.S. I would be very surprised if there aren’t already a handful of companies in Silicon Valley who have already figured this out.