Entry of non-traditional Payments Services Providers (PSPs), coupled with the rise of e-commerce and m-commerce has challenged the traditional cards industry players (issuers and acquirers). My colleague, Himanshu Agrawal, and I have been discussing how as customers have better choice of payments products that provide convenience and speed (contactless cards, digital wallets, mobile wallets, P2P payments apps), issuers have to work harder to retain / attract customers and at the same time to continue to maintain profit margins. Interchange regulation is another big threat to the card issuers’ revenues, forcing them to think of alternative ways to compensate for the loss of interchange revenue or reduce the operating costs.

Product innovation and adoption of digital technologies (including analytics and cloud) is the key to reshaping and further evolution of the cards industry.

Below are some of the key challenges faced by the cards issuers and acquirers that need to be addressed immediately.

  • Credit cards’ declining role as a lending product
  • Need to adapt to the multichannel environment
  • Keeping pace with the customers’ changing needs
  • Need to innovate for digital customer experience
  • Address fraud risks associated with e-commerce and m-commerce
  • Revenue implications of mobile wallets
  • Rise of contactless transaction volumes
  • Impact of Interchange regulations
  • In-house Vs 3rd party processing
  • Competition from new / non-traditional PSPs and need to also focus on value added service


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