With so many major retailers that reported being hacked and the hyped introduction of Apply Pay, credit cards were a big part of the news in 2014.
As someone whose job it has been to closely watch this industry, I occasionally try to look into my crystal ball at the end of the year to try to predict what lies ahead for credit cards. Here are my bold predictions for 2015…
1. Retailers will ask Congress to curtail merchant fees
These merchant fees are sometimes called swipe fees. They’re what merchants pay to the credit card companies — a percentage of each sale just for the privilege of being able to accept credit cards. They’ve complained for years that the prices are unfair.
This isn’t a very bold prediction, but in 2015, retailers will try to portray these fees as a “tax on consumers.” But no one will be fooled by the fact that these fees are part of their cost of doing business — just like rent, labor, energy, and so forth.
Still, I predict the retailers will lobby Congress to attach “swipe fee reform” to any and all legislation even remotely related to finance. And as they have in the past, their efforts will fail.
2. Apple Pay will dominate, but only for the latest iPhone users
I once heard a scientist comment on a report of an experimental cure for spinal cord injuries that showed some initial success in tests on mice. He was quick to note that this was fantastic news if you suffered from this kind of injury — and if you were a mouse. So far, Apple Pay seems to be a technical success, but only if you happen to have the latest iPhone.
Since only 1 in 4 adults have an iPhone, and since most use older versions that aren’t compatible with Apple Pay, it’s far from being a cure for the common credit card. Considering that over 70 percent of adults have a credit card, and most of the rest have a debit card, Apple Pay still has a way to go, and may never really replace these forms of payment.
Nevertheless, I suspect that the relative success of Apple Pay compared to other mobile payment systems will provoke the payment industry to start developing a multi-platform mobile solution that’ll be compatible with all phones, credit cards, and debit cards. This development will be necessary before we say goodbye to the plastic card, but I don’t expect it in 2015.
3. Credit cards will become the main source of airline miles
As a credit card geek, I have long since stopped worrying about how to earn miles the old-fashioned way: by stepping on an airplane. But in 2015, the rest of the country will start to catch on as Delta and United start awarding miles based on money spent on the ticket rather than distance flown.
This will mean that the vast majority of travelers will earn fewer miles by paying for tickets, making credit cards an even more important source for miles for more people.
There is even some hope that there could be more award seats available if there are fewer total miles chasing them. But most industry observers are cynical enough to expect the airlines to reduce award seats availability in order to continue to confound their loyal customer’s dreams of free trips.