Dec 30, 2021

10 Innovative Ways Fintech's Helped Credit Card Development

Fintech
Finance
Payments
Innovation
Melanie Pitman
5 min
Young family in the showroom paying with credit card for buying new car
Uncovering ten of the most cutting-edge uses for financial technology in credit card development, from crypto payments to enhanced rewards for customers

Fintech doesn't always have visible, measurable effects that the average consumer will notice. However, from a business perspective, fintech has had an immeasurable impact on the credit card industry.

Here are some notable examples of fintech at work.

1. Credit card comparison websites

Card comparison sites offer a unique perspective for businesses. They can see how their cards stack up against the competition, get insight into what users think about their products, and even gain valuable affiliate partnerships to increase their user base.

For example, creditcardGenius can compare over 170 credit cards in real-time based on user preferences. Their algorithm considers over 126 features of all credit cards in their database and compares them using unbiased math. This makes their recommendations detailed and personal.

2. Bonuses and cashback for credit card applications

These same comparison sites and other 3rd parties occasionally provide cashback bonus promotions for those looking at credit cards. This is, of course, on top of the credit card's own welcome bonuses. One example is the cashback credit card offers called GeniusCash.

These incentives from 3rd parties make the credit card application process more appealing to prospective clients through multiple channels, adding an "exclusive" flair not often possible through their own website. And since much of the process is done through affiliate channels, the credit card company themselves don't need to shoulder as much of the marketing work.

The 3rd party site benefits from the site visits, and the card companies gain more clients. It's an appealing and lucrative tactic for both sides and for the clients too.

3. Virtual credit cards

Canadians have been subject to some dramatic information breaches, and virtual credit cards are one tool consumers can use to help protect themselves.

These can be assigned as single-use only, be given a set spending limit, or be designated for use at a single merchant. For ease of use, they can be attached to a digital wallet like Google Pay or Apple Pay, both of which have their own additional levels of security.

Clients are looking for peace of mind, which is one way that credit card companies have been able to provide it. And really, it seems like a natural step for businesses operating in a world of constantly evolving technology.

4. Digital wallets

Thanks to digital wallets, consumers can leave their cards at home without worrying about theft or loss. Since the information stored in the phone is heavily encrypted, digital wallets offer better security than a physical credit card.

Again, this provides essential peace of mind for the consumer, and a peaceful consumer is a happy consumer. From a business perspective, marketing yourself as a company that values safety and peace of mind is vital for increasing subscriptions and, therefore, revenue. 

Plus, the less work and human resources needed to cancel and process lost or stolen cards, the better. 

5. Online-only credit card companies

With no brick-and-mortar branches, online-only card companies offer a whole new experience for their clients. They aim to simplify the banking experience by using technology to help their clients save on costs and fees. 

Neo Financial and MogoLounge are two such companies in Canada, and neither one has any physical branch locations. 

These companies have found a way to cut the significant costs associated with branch locations, allowing them to offer more competitive pricing and services. They've thought outside the box and leveraged society's online habits to work in their favour. 

6. Apple Card

Apple has made a lucrative choice by entering the credit card sector.

Although not yet available in Canada, the Apple Card offers impressive, unique features to enhance security and provide its American users unrestrictive spending, earning, and redemption opportunities.

When a purchase is made, the user's cashback rewards are deposited onto their Apple Cash and can be used at any time to pay for whatever purchases they choose. This freedom of choice and use is new and obviously appealing to consumers, as it's already a top-ranking card for customer satisfaction.

7. Crypto credit cards

Several crypto credit cards are available to Canadians now, and the widely anticipated Shakepay Visa is coming soon. Credit cards for crypto are available as prepaid cards and typical credit cards that earn rewards. 

As more businesses – retail and otherwise – work to accept crypto as a form of payment, the demand for fund accessibility becomes more prevalent. 

Crypto credit cards are here to answer this demand and this, in turn, creates more opportunities for those same businesses.

8. AI and chatbots

AI has improved predictive analysis on the backend to make fraudulent activity easier and faster to detect. And on the front end, chatbots offer more immediate answers to questions, reassurance and fast reactions regarding fraudulent activity. They can even suggest alternate rewards more suited to the user's needs. These bots play important roles in acquiring, converting, and retaining clients in various ways.  

While it's still not perfect and clients still need to contact a call centre representative for most issues, the technology is improving, and AI has helped credit card corporations save significant money.

9. Rewards with special partnerships 

Air Miles has been using this strategy for years, but it seems others are taking things even further and offering surprisingly high earn rates for cardholders shopping with their retail partners. Brim Financial and Neo are two such corporations that partner with various retailers to offer reward rates of up to 30% for their clients. 

These types of partnerships are mutually beneficial, and they increase loyalty for retailers and card companies, which translates to higher revues. Deloitte reports that these partnerships account for 10% of the credit card market, but the article also says stagnancy is a problem. 

10. Easy to transfer rewards to other programs 

The pandemic has changed things. Since travel wasn't an option for most, it lost its value as a points system for many credit cardholders. 

And businesses have been forced to pay attention to this. They've been focusing on changing partnerships and rewards systems to improve customer retention. 

American Express and RBC offer excellent flexibility for Canadians looking to redeem points. There's a reason why Amex's Cobalt Card continues to win consumer awards, and a big part of this is because the value of flexible reward programs has increased.

***

About the author: Melanie Pitman is a Content Specialist for creditcardGenius.ca, an online credit card comparison engine, comparing over 126 features of nearly 200 Canadian credit cards. Their new cashback rewards program, called GeniusCash, offers cashback for anyone applying and approved for featured credit cards.

Share article