5 Credit Card Changes — With More Rewards, Less Fraud — Coming Soon

Credit cards are a little like sports cars: A newer, shinier, more exciting version that includes richer rewards or better fraud protection is often just around the corner.

When 260 people from the credit card industry, credit bureaus, and financial media gathered in Washington, D.C., recently for CardCon — a credit card and media conference — attendees got a sneak peek at some of the changes about to hit consumers’ wallets. Here’s what to look out for:

1. Even more co-branded credit cards to choose from

Purchase volume on co-branded credit cards continues to grow: According to Packaged Facts, a market research publisher, co-branded credit cards generated $990 billion in purchases in 2018, up an annual average of 7.9% from 2016.

If your favorite retailer doesn’t have a co-branded card yet, chances are it will soon join the ranks of Apple, Houzz, Starbucks and dozens of others and launch one. Not only do co-branded cards allow retailers to collect more information about how consumers shop, but they also serve as an additional revenue stream.

Co-branded cards can allow consumers to rack up more rewards at their favorite store. The new Capital One Walmart Rewards Mastercard, debuting in September 2019, offers 5% back on Walmart.com and Walmart app purchases, for example. And store cards can also offer other benefits, such as free shipping or extended return periods, both of which are features of the Target Circle™ Credit Card, for example.

2. Richer and more targeted credit card rewards

Unlike industry behemoths such as Chase or Citibank, relative newcomer Brex offers a corporate charge card aimed at startup companies. The Brex Card offers a higher-than-normal rewards rate in certain categories, such as 7 points per dollar on rideshares and taxis, said Thomas Piani, head of partnerships and rewards at Brex, while speaking on a CardCon panel on the sustainability of credit card rewards.

“We know it’s a small portion of overall spend,” said Piani, which is what he says allows the company to offer such a high rate in that category.

Piani added that Brex also provides generous sign-up offers by working with partners such as Amazon Web Services and Google Ads to give additional value.

“There’s no reason why a credit card [issuer] should pay all the costs of rewards. We negotiate deals on behalf of our customers,” he said. “We can drive customer acquisition and retention for them.”

3. Better fraud protection

To protect your credit card information, issuers are increasingly turning to “tokenization,” or the creation of unique codes for each transaction, so if those numbers are compromised, the card itself is still safe.

Brad Patterson, vice president of enterprise payment strategies and operations at PenFed Credit Union, compared tokenization to using hotel swipe cards to access your hotel room. While hundreds of people may have used that piece of plastic before, it has a different code on it each time, so only you can get into the room.

Some companies, like Netflix and Apple, already use tokenization to reduce customer fraud. Patterson says we will likely see it become more widespread in the coming months, which should mean less fraud for consumers.

4. A reduction in less popular benefits

You may already have noticed cuts to secondary benefits on your credit cards: Over the past couple of years, several issuers have cut back on benefits such as extended product warranty, purchase and price protection, and coverage on auto rentals. Those types of cuts are likely to continue, largely because many cardholders don’t take advantage of those perks anyway and are unlikely to miss them.

“You will see banks trim around the edge and reduce ancillary benefits,” said David Gold, founder and managing partner of Golden Peak Advisors, a credit card industry consultancy, at a CardCon panel discussion. “We’re seeing banks look for ways to save money without customers noticing,” he added.

Things such as concierge service, return guarantee and price guarantee could be among such secondary benefits that could be cut in order to preserve the perks that consumers do care a lot about: rewards.

5. A quicker credit card approval process

Card issuers are constantly looking for ways to speed up the card approval process to make it easier and faster for applicants.

“The ultimate goal is to have one click to apply,” said Amy Clark, senior product manager at Experian Consumer Services, during a discussion panel about the behind-the-scenes process. That’s possible if the company already has other information collected about the consumer, such as income details. If card issuers have that information and can quickly approve the applicant, then the consumer can also start using the card almost immediately.

With the new Capital One Walmart Rewards Mastercard, applicants can send a text message to start the application process. They receive a link that takes them to the application page. Then, once they are approved and their identity verified, they have immediate access to their card and can start making purchases.

That’s the kind of instant gratification that consumers appreciate and card issuers can make money from. In the credit industry, that’s considered a win-win.