Credit card data on smartphones might not get rid of plastic for good
Recently, Verizon, AT&T and T-Mobile announced their plans to begin integrating credit card information into smartphones. Through this, consumers will have the ability to make charges with devices at merchants across the country. As Wired reports, however, the change may not get rid of plastic for good.
“Visa and MasterCard are so universal at this point that the barriers to entry for any new payment system are almost insurmountable,” IDC Financial Insights practice director for payments and security Aaron MacPherson told Wired.
Merchant fees and interest rates are likely to follow credit cards on their move over to smartphones, the site notes. This means that swipe fees will continue to encourage vendors to mark up prices for consumers to make up for the lost revenue. Wired also says that Americans can expect to see more middle men, as opposed to fewer. The internet cannot match the reliability, speed and security afforded by credit card company’s private networks, according to MacPherson.
Regardless, consumers are advised to monitor changes their credit card issuers make to interest rates and fees as the new service rolls out. A hike in rates can cause credit card debt for unsuspecting members.