Dear Luc: Should we ditch the plastic bank card?

In Dear Luc, we answer the questions the industry’s fintech founders are too afraid to ask, and solve the problems they don’t want their VCs to know about.

From regulation readiness to technology teething troubles, our start-up agony uncle, Luc Gueriane, is here to help.

Luc has over seven years’ experience working with flagship fintechs like Revolut, Wise (formerly TransferWise), Monzo and Curve.

His expertise and extensive work in the fintech ecosystem mean that Luc is able to offer unique insight into the building of a successful fintech company.

Confession #8: Time to ditch the plastic?

Dear Luc,

As mobile wallets overtake cards and we strive for a more environmentally friendly industry, is plastic still needed?

Sustainability is a big topic in payments and with the increasing adoption of mobile wallets it’s understandable why people might think that digital or sustainable payment methods are overtaking cards. However, despite efforts to create a more environmentally friendly industry, plastic cards are still overwhelmingly the most popular payment method with six billion banking cards made every year.

The most common route to access payment products is through a mainstream provider and it would be unusual if they weren’t to provide you with a plastic card. But that doesn’t mean it will always be this way.

Many well-known incumbent and challenger banks are turning the tide on the plastic waste problem by launching eco-friendly cards made from recycled plastics. Starling rolled out its debit card made from recycled PVC with Tagnitecrest earlier this year and HSBC announced a similar offering shortly after.

These use cases demonstrate that plastic cards are still viewed as an essential element of banking, even though recycled options appeal to consumers seeking out ways to reduce their carbon footprint.

Biodegradable and wooden cards are also arriving on the market with customers taking comfort that their cards are not only recyclable but created with more sustainable materials.

Six billion cards are made every year – is it time to slow down?

Treecard – which launches this summer – recently raised $5.1 million in seed funding to launch a card made out of wood that promises to fund reforesting via the interchange fees generated – many potential customers have already joined its waiting list.

On the other side of the industry, payment solution providers like Ecolytiq have been created to help banks and fintechs calculate the consequence of individual payment transactions and to guide their customers to a more sustainable lifestyle through incentives, nudges and compensation.

Metal materials have also been gaining traction for a long time with the American Express metal Centurion Card celebrating its 20^th anniversary this year, and inspiring the creation of new premium metal cards ever since.

Curve, Monzo, Revolut and even Apple have launched exclusive metal cards, showing that metal has firmly become a trend amongst UK challenger banks and fintech companies looking to set themselves apart. Although these are often considered luxury products and less about protecting the environment, it shows that not all customers are looking for plastic in their wallets.

There is both growing recognition and growing pressure on fintech from the wider market to create more sustainable and environmentally friendly propositions. And the examples I’ve shared shows that the industry is now paying attention.

It is important to remember that plastic cards have been around since the 1950s and to replace them entirely with mobile wallets will require a seismic change in behaviour across different generations. The pandemic is just one of those changes, which will almost certainly reduce the use of cash long term. However, this means we’re likely to see card use grow in the short to medium term, not decline.

Furthermore, the shift to mobile wallets also requires reassurance to customers about security, and how their data is shared. It is one thing to tap a card from a security perspective, but for many, tapping a card is an entirely different proposition given the vast amounts of personal data they hold.

We must also consider financial inclusion. Customers all over the world lack access to bank accounts, let alone a smartphone capable of mobile payments. There have been massive strides made to make mobile wallets universally available, but there will be demographics who either aren’t that tech-savvy or simply wouldn’t have the option to rely only on mobile or wearable payments.

In the UK alone, contactless ATMs also aren’t fully propagated yet, so for those that rely on cash it would be hard to imagine their lives without a plastic card.

As much as tech adopters could lead the way by encouraging their friends and families to ditch plastic and go digital, I can’t see plastic disappearing until programmes are offered only as mobile wallets, instead of the wallet being an add-on to the card.

However, I do predict that businesses with a sustainable ethos will continue to lead the way in encouraging further change and in time, plastic cards will become a thing of the past.

Do you have an embarrassing question you want answered, or a seemingly unsolvable problem you’d want help with? Post an anonymous comment below, or email FinTech Futures’ Alex Hamilton in confidence.

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