Technology transforming credit card industry

The credit card business turned 55 last year, and it might look as though the industry is having a midlife crisis -- what with credit purveyors trying to dump the classic mag-stripe-and-plastic cards in favor of cards that use wireless technologies and even mobile phones. But that's no midlife crisis. It's market expansion, and it could change the way most people use their credit cards.

"Startling innovations in technology are rolling like thunder through our industry," says W. Roy Dunbar, MasterCard's president of global technology and operations, in a May 2006 speech to the 18th annual Card Forum & Expo. Among the factors Dunbar cited as having sparked the need for innovation: consumer demands for easier, more secure transactions; globalization; and the impact of new technologies, which are creating new business opportunities (such as paying for something with a cell phone).

MasterCard faces more competition in part because it (along with Visa International) recently lost an antitrust suit, leaving the door open for its member banks to end now-exclusive relationships by signing deals with American Express and Discover. The company also sees an uptick in competition from PayPal and other online payment services.

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