Category: Innovation/Technology

Premium Metal Cards Driving Growth in Emerging Markets of Asia Pacific and Latin America

Payment technology must grapple with security, innovation and adaptive functionality. Ideas to revolutionize this market are already in full swing with different parts of the globe embracing a variety of modalities to engage customers. Yet there is one solution that addresses the needs across all countries, premium metal cards. Metal cards are gaining traction across international borders, meeting the generational divide, and enabling the fintech disruptors always looking to enhance the customer experience to attract and retain new customers.

The 2022 CompoSecure report on “Growth of Premium Metal Cards,” based on a global survey by Edgar, Dunn & Company, identified that metal card programs can be a powerful tool in promoting a positive feeling about a bank, attracting new customers and driving spending by keeping it top-of-wallet. 

The survey of more than 18,000 consumers across 18 markets worldwide sought consumer attitudes on metal cards. Recognition and adoption of metal cards proved to be growing across all regions, while demand soared in the emerging markets of Asia Pacific and Latin America. 

Asia Pacific – Influential and Interested

The APAC region has some of the strongest economies in the world with many of the wealthiest consumers and remains a coveted region for financial institutions. For card issuers, Asia Pacific accounts for approximately half of all credit cards in circulation – which as of 2021 is 3.2 billion, and of this, 1.5 billion are in Asia Pacific, with the majority in China and Japan. This region continues to drive demand for metal cards because the affluent want the premium feel of a metal card.  

The survey found that the APAC region was the most familiar with metal cards- India (76%,) China (65%), Indonesia (59%), Singapore (49%) and Japan (46%). These figures are significantly higher than recognition in the U.S. (45%). Consumers in Turkey (72%), China (68%), India (89%) and Indonesia (89%) said they would have a more positive feeling about their bank because it offered metal cards. Respondents in India (72%) and Indonesia (72%) said they would leave their bank for another that offered a metal card with equivalent rewards and benefits. Five standout economies are prime targets for financial institutions seeking to implement premium metal card programs in Asia Pacific: 

  • India: An astounding 91% of respondents would select a metal card if the rewards and benefits were equal – the highest of any region. Further, 72% are willing to switch banks to get a metal card, up from 59% in the earlier survey.
  • China: Payment issuers should take note of the potential to capture higher transaction volume with a metal card option because 82% of Chinese respondents indicated they would select a metal card over plastic if rewards and benefits are the same. Results are even higher among the coveted younger 25-34 demographic (89%) and the affluent (89%). 
  • Indonesia: Indonesia had the highest response of any region for feeling more positive about their bank if it offered a metal card (89%) and was among the highest response for opting to leave their current bank for a program with a metal card with equal rewards and benefits (72%). 
  • Singapore: 49% of respondents are aware of metal cards, while 29% of respondents who had not heard of a metal card before the survey would like one. 71% of respondents would select a metal over a plastic card if rewards and benefits are the same – a dramatic increase from 59% from three years ago. Singapore also had the highest response of survey respondents that prefer using a metal card for in-person transactions (31%). 
  • Japan: Awareness is growing in this critical market (46% this year, up 5% from the previous study). Younger and wealthier Japanese respondents also were more likely to change banks for one offering a metal card (71% affluent and 52% younger).

Latin America –  Land of Opportunity

Latin America has long been unnoticed in the financial innovation space. However, the fintech market has doubled over the last three years in Latin America, shrinking the unbanked population to only 45% of the population. 

Banks and other financial institutions are aiming their lens to this now booming region with consumers more knowledgeable than ever about their banking options. The study looked at two of the biggest players in Latin America and their consumers’ outlook on metal cards. 

  • Brazil: 65% of consumers are unfamiliar with metal cards, but almost 40% would like one. Metal card awareness has increased 10% since 2018, when only 25% of Brazilian consumers were familiar with metal cards. Even though 45% of Brazilian respondents did not know if their bank offered metal cards, 73% of them said that they would feel more positively about their bank if they were to offer metal cards and would change banks to have access to a metal card, assuming payment card benefits and rewards were the same. In line with consumer demand for sustainably sourced products globally, 87% of respondents would select a card made of eco-friendly materials if all the benefits and rewards were the same. 
  • Mexico: Almost half of the respondents in Mexico (47%) do not know if their bank offers metal cards, however, 88% of respondents would likely select a metal card over a plastic one if all the rewards and benefits were the same. 70% of Mexican respondents would leave their bank for another that offered a metal card. 

As the industry looks to new and innovative ways to differentiate and elevate the customer experience, the appeal of the premium metal card could provide an important disruption to the payments market in these emerging markets. For more information on ”The Growth of Premium Metal Cards”, click here

Making Metal Payment Cards Sustainable

Working in the payment industry for the last 25 years, traveling is a part of my life. I have lived and worked in seven countries. My family and I have seen the pollution in the Great Barrier Reef in Australia and the grey snow resulting from China’s industrial areas. Those experiences fueled my passion and commitment to creating a more sustainable world, both personally and professionally. I began my career in Germany, where companies were already developing sustainability initiatives to address environmental issues. I carry the lessons I learned there with me today. In fact, a key reason I now work at CompoSecure is because I believe metal payment cards are better for the environment than plastic.

Recycled Metal

The use of recycled stainless steel plays an important role in sustainable design and alternative energy evolution. Ultimately, the most environmentally friendly materials are corrosion-resistant, durable, have high-recycled content and recapture rates, provide long service life and reduce resource use. Stainless steel provides all these benefits. If the correct stainless steel is selected and properly maintained, it will last the intended life of the product. Stainless steel is also 100% recyclable into the same product with no reduction in quality. 

CompoSecure has been proactively pursuing environmentally friendly products for over 20 years and is now manufacturing card products using stainless steel that contains 65% post-consumer recycled stainless steel. When considering that 33-50% of the card’s weight is made up of metal materials, the overall amount of recycled materials in the card by weight is over 50%, a very high bar for the industry. 

In addition to what materials go into our products, we also analyze how we make our cards, reducing waste and promoting sustainability at every step of the process — from using an energy-efficient LED lighting system to recycling the water used in manufacturing. For instance, CompoSecure uses a closed water filtration system when manufacturing millions of cards a year, enabling a more efficient way to reuse more than 80% of this water

Last year, CompoSecure enlisted Sustainable Business Consulting as a third-party advisor to complete its GHG inventory to assess emissions, energy consumption and waste. The annual report provides a comprehensive accounting of total greenhouse gas emissions for all man-made sources in the United States. As part of its GHG inventory, CompoSecure computed its 2019 and 2020 emissions for its operations and began taking active steps to reduce its overall carbon footprint and offset its energy consumption. CompoSecure purchased Renewable Energy Credits to ensure 100% of its electricity and gas usage is matched by renewable energy credits.

Industry Movement to Green

CompoSecure is not alone in this effort. Several industry initiatives have established standards for sustainability in products and practices, and CompoSecure is the first metal payment card manufacturer to meet these industry standards. 

  • ICMA EcoLabel Standard Certification: CompoSecure achieved ICMA EcoLabel Standard certification and verified assurance on its Ceramic Metal Hybrid Dual Interface Card, Metal Hybrid Dual Interface Card and Metal Veneer Dual Interface Card products in the recycled content category. This certification was created by the International Card Manufacturers Association (ICMA), a global trade association for card manufacturers, personalizers, issuers and suppliers. The EcoLabel Standard Program was created in response to consumer and card issuer demand for more eco-friendly payment and identification cards, sets measurable criteria for assessing the environmental impact of cards and conforms with global ISO principles for environmental labeling through a third-party eco-labeling certification program.
  • UL Environment Claim Validation: CompoSecure’s Ceramic Metal Hybrid Dual Interface Card, Metal Hybrid Dual Interface Card and Metal Veneer Dual Interface Card products achieved Environmental Claim Validation from UL, the global safety science leader and one of the world’s leading sources for credible and sustainable product information. UL utilizes rigorous scientific processes to evaluate the accuracy of environmental claims. CompoSecure will participate in an annual review process to maintain its UL validations.
  • ISO 14001 Certification: The certification process follows standards set by ISO (the International Organization for Standardization) to reduce the effect of global warming and avert any and all adverse impacts on the global climate. CompoSecure’s ISO implementation took place over 12 months. Audits were conducted at CompoSecure manufacturing centers and offices. Through this certification process, CompoSecure has improved its sustainability operations by reducing its waste, improving its efficiency and enhancing operations using a systematic approach embodied in ISO 14001.

We All Have a Part to Play

Education changes minds. I’ve seen that it’s possible to convert resistance to changing to eco-friendlier ways of doing business — when people learn the benefits, they become sustainability advocates. Transforming mindset is powerful and keeps me focused on ideas that can further reduce our carbon footprint. 

It’s exciting to witness the industry’s embrace of change. American Express® and JPMorgan Chase® are leading the way with aggressive environmental initiatives in the financial sector. CompoSecure is following suit by committing to take its environmental initiatives to the next level in the years to come, including a plan to become carbon neutral, shift to renewable energy, partner with financial institutions on reclaiming used cards and bolster research for future, more sustainable products.Sustainability isn’t just good for the environment, it’s good for business. A recent global report based on a survey by Edgar, Dunn & Company of 18,000 people in 18 markets around the world showed a global climate mindset with an overwhelming majority (72%) of respondents saying they would choose a payment card made of eco-friendly materials if all rewards and benefits were the same. Banks can now invest in their bottom-line while also investing in sustainability.
Sustainability needs to be part of the foundation of all companies. Our efforts are just beginning, but my colleagues and I are committed to a higher purpose, keeping this planet healthy for all generations to come.

EMPLOYEE SPOTLIGHT: RE‑ENGINEERING QUALITY

CompoSecure has gone to great lengths to protect its employees during this pandemic. There are many new security protocols and safety processes in place, but who is in charge of ensuring all requirements are met, and metal card production is smooth sailing? Meet Mary Levitsky, one of the Quality Engineers at CompoSecure. She ensures the company meets all the ISO regulations, 3rd party requirements, and that everyone is following the company’s high standards for quality. “Bottomline, I make sure everything exceeds expectations,” Mary confesses. Her dedication has ensured that CompoSecure’s customers get the best product possible because all the work is done properly and facilities are operating at optimal capacity.

It Takes a Village

Mary will be the first to tell you, she is not alone. There are many tasked with overseeing the quality standards at the different CompoSecure facilities on each shift. Everyone has a role to play in the success of operating during this pandemic. From the board room to the mailroom, each and every CompoSecure employee has stepped up to do their part to improve metal card manufacturing and reduce the risk of COVID-19. This includes the necessary social distancing, PPE for everyone, thermal imaging cameras for temperature checks, segregated facilities, staggered shifts, and contact tracing badges for all employees to measure interactions. Mary points out that these safety measurements are essential to ensuring necessary workers on-site feel comfortable on the manufacturing floor.

Company management has shown its overwhelming support for all employees through texts, emails and virtual meetings/lunches, as company leaders worked to calm fears and help staff adapt to this new normal. From Mary’s first interview at CompoSecure, she noticed something different: “that the company had a spark, that they were onto something bigger and better. You can see that love, focus on the team and an abiding respect for all.”

Mary and the entire CompoSecure team has re-engineered the way quality checks are done and made issue resolution a top priority. These two essential functions are even more critical because of a pandemic. Problems always come up, and being able to address them quickly and safely, while ensuring our social distancing efforts, has helped CompoSecure continue to be successful.

Hardships Breed Compassion

Mary is no stranger to challenges in her life.  She has lost loved ones, been through job layoffs, taken care of disabled family members and has been the moral support for her sister after being diagnosed with COVID-19 as a frontline worker. Facing hardships throughout her life has only spurred Mary’s empathy for helping those in need in her community. In addition to supporting her sister with weekly meals, Mary volunteered at the Arc of Somerset, an organization that helps those with intellectual and developmental disabilities, before the coronavirus limited activities with the non-profit. She also serves at an animal shelter, works with local animal rescue groups and plays “foster mom” to three Pitbull puppies. She is passing on her parents’ legacy – “to take care of each other – that means the folks I work with my community and with the organizations that I’m involved with.”

CompoSecure works with its employees to fuel their passion for serving the community and finding ways to help its neighbors. The company and team members individually are very active in the local and regional communities through volunteerism, mentoring and financial support. CompoSecure has donated thousands of volunteer hours, almost 1,000 pounds of food & clothing and over $100,000 in cash donations to local charities and organizations.

Silver Lining

As the company adapts to this post-COVID world, Mary believes that many lessons have been learned from this pandemic. For instance, CompoSecure has learned to be flexible with how it communicates with its clients, being more efficient with resources and find new ways to enhance the customer experience. In addition, the team camaraderie has strengthened due to the strong support from CompoSecure’s leadership and management.  “It is all the little things that leaders do that add up to a cumulative result with employees. I bleed Compo blue. Tried and true.“

Mary, we are grateful to you and proud you are a member of our team.

The Future of Contactless Payments in the COVID Era

The Future of Payments in the Era of COVID: Contactless Payments

We aren’t saying that cash will be a thing of the past, but we do believe that contactless card payments will soon be the de facto standard of the future. Just like Zoom has become the norm, so will contactless payments. The COVID pandemic has consumers asking why don’t we have this, and merchants stepping up the conversion of their readers to make customers more comfortable. No one wants to expose themselves to potential health risks by touching cash or a payment keypad. Recent MasterCard data shows that contactless payments increased 40% in Q1 compared to the previous quarter as the global pandemic worsened. This surge will continue according to a recent American Express survey that states 58% of consumers who have used contactless payments in the past are more likely to use them moving forward.


The Psychology of Contactless

Consumer behavior is changing before our eyes. According to recent Visa data, 31 million Americans tapped a Visa contactless card or digital wallet in March 2020, up from 25 million in November, with overall contactless usage in the US growing 150% since March 2019.  This follows the global trend, where 60% of Visa transactions outside the US are already using contactless. Consumers want to get in and out of stores quickly with minimal contact during the transaction. There is a new, COVID-caused psychological factor prevailing.

A recent Mastercard consumer survey substantiated those fears around payment transactions. Since the pandemic, half of consumers have an increased preference for contactless payments, with a third of US consumers claiming to use their contactless card more than other cards in their wallet. Nearly half of consumers wipe their payment cards clean after using them, which points to the top reason 77% of consumers prefer contactless payment: it is a “cleaner” way to pay. This focus on hygiene is demonstrated in that more than half of US consumers do not want to provide a signature at the point of sale.

The Business Case for Contactless 

The migration from cash to contactless can prove attractive economics to merchants and the banking industry. From a merchant perspective, contactless cards speed up the checkout process and improve the customer experience because it is faster, more convenient and more efficient. For financial institutions, data from A.T. Kearney and Visa show that banks could generate an estimated $2.4 billion in incremental earnings over the next five years due to increased contactless card usage while achieving an industry-wide cash-handling cost savings of up to 6% of annual consumer banking operating expenses. These estimates were based on contactless adoption statistics in markets similar to the US which showed that financial institutions on average achieved an increase of 20-30% in transactions in the three years following the acceleration of contactless cards, which translated to 5-40 new transactions per card per year.

 

COVID created an inflection point for cash to card migration and the adoption of contactless card payments, but also brings challenges for mobile payments which are complicated by the use of masks and other PPE.

 

The Digital Wallet vs. Contactless Payments

The technology for tapping a contactless card is virtually interchangeable with digital mobile payments such as Apple Pay or Google Pay. Merchants that accept a tap from a card also can typically accept a tap from a phone. So, what technology will win out? We believe cards have served consumers extremely well for more than 50 years and that adding contactless capabilities to the card is an easier behavioral change than shifting to mobile wallets. This new technology has solved a real consumer pain point and the adoption curve follows. For example, I no longer store 30+ CDs of music in my car or carry a book of paper maps because each of these were not a good consumer experience and were transformed by something significantly better. While COVID will provide an inflection point for cash to card migration and adoption of contactless, I recently tried an Apple Pay transaction while wearing a mask and found using a card for a tap-to-pay transaction was significantly easier.

The latest data from PYMTS.com indicates that digital wallets are actually decreasing in their share of eligible transactions from 6% in 2019 to 5.1% in 2020 with Apple Pay at just 0.9% of retail sales (excluding online and vehicle sales). Pew Research believes this is because of lack of trust for this digital technology. Across all generations, there were persistent concerns about the security of digital wallets and indications that consumers have more trust in traditional methods, such as physical cards.

Digital wallets have been around for more than a decade; however, recent data shows that only 15% of consumers made an in-store transaction with a digital wallet in late 2019. The number one reason for consumers not adopting a digital wallet was “no need/not interested” (36% of non-users). The Forbes article supports what we have seen from our customers: “the near-term contactless cards will have broader market appeal than contactless digital wallets given that they encourage an evolutionary, rather than revolutionary, behavior change.” In fact, A. T. Kearney states: “US consumers are interested in contactless cards as they are perceived as “fun and exciting,” secure and simple. Moreover, contactless cards are the future of payments … given how prominent contactless cards are in other countries.”

The Time is Now

The market saturation is reaching a tipping point according to Visa data. The US now has the most contactless cards of any market globally at 175 million, with nine of the top ten US issuers actively distributing new contactless cards. New analyst research predicts that contactless cards will exceed initial estimates for the year by 110 million because of the coronavirus. This figure will bring the total number of contactless payment cards in worldwide circulation to more than 2 billion by the end of the year.

In the same vein, merchants have been steadily upgrading POS terminals, shipping 47.8 million contactless units globally in 2019, bringing the total to 100.4 million worldwide, which is now 62% of all POS terminals, according to the latest researchSome issuers are seeing nearly 70% of face-to-face transactions in the US becoming tap and pay purchases. We expect this number to explode in 2020 due to the coronavirus. Card issuers are promoting tap and pay usage by raising the purchase limits for contactless purchases. For example, in April, UK merchants saw approximately a 50% reduction in the number of times customers touched the POS because of the increased limits on contactless purchases. Globally, contactless payments continue to multiply with the latest data estimating that contactless terminals will increase at a compound annual growth rate (CAGR) of 12.9% from 100.4 million units in 2019 to 184.5 million units in 2024. This means that by 2024 more than 88% of the world’s POS terminals will be contactless, up from 62% in 2019.

COVID provides a simple and effective messaging opportunity for financial institutions to drive contactless payments in addition to transaction lift. It is a crucial time in our industry because contactless promotes and capitalizes on social distancing in addition to the typical speed and convenience benefits, which are often touted as the primary drivers of adoption.

New concerns and conveniences are shaping the landscape of how consumers prefer to pay. Though unexpected circumstances are driving rapid changes in behavior, it is up to the payment card industry to continue to innovate and issuers to be ready to meet evolving demands.