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Chip and PIN five years from now

So I finally sussed out a way to make my long-term vision of sticking chips inside people for payments a reality through a medium-term transition away from my short-term loathing for Chip & PIN

This will be achieved as we strip things back to the basics.

For example, look at any credit card today and it’s got a chip on it (unless you’re in the USA where mag stripe still rules).
That Chip is the EMV – Europay, Mastercard, Visa – chip and is capable
of basic functionalities, including intelligence to be used with
payments terminals with a PIN.

The thing is, why do you need the card bit?

I mean, you have a payments card with a chip … why do we need the plastic holder for that chip?

Because it has a mag stripe?  Duh … that one went out with Chip & PIN.

Because ATMs have big slots to put cards in?  Yeah … today.

Because payments terminals have big slots to put cards in?  Yeah … today.

So in the near, medium-term future, this will all change couldn’t it?

What got me to thinking about this is that I’m totally in love with the Kingmax USB
stick I carry around in my wallet.  It’s tiny, flat, and is the
smallest USB flash drive in the world.  It is so small that it is
almost the size of a paper clip.

It is not only small but also
very thin, because it’s basically a USB device stripped down to the
basic chip.  Throw away all the plastic bits and that’s all you’re left
with – the chippey connections.

That’s all you need isn’t it?

A
little like flash memory for digital cameras and mobile phones that
started as those credit card sized sticks and are now the size of
fingernails, with double, triple, quadruple the memory, everything is
getting stripped down to basics.

Except credit and debit cards.

They’re still HUGE.

So why not throw away all those plastickey bits on the cards and cut it down to the basic chip. 

Ahh … ‘cos we’d then have to throw away all of our ATMs and card terminals.

Shame.

But here’s the upside.  A basic, standardised bank chip could be multi-bank, multi-application, stored value holders.

When
you get to paying, it could have all your financial providers’ details
– not just one bank’s, but all of them – and you could then just pick
the icon of the card processor you want to use for that transaction.

Equally,
if we standardised the chip to something like a USB or Flash Memory
Drive, then we could use that chip as a direct chip insert into PC’s
and mobile telephones.

This leads to the Chip & PIN Vision of five years away.

Five
years away, you have a pure, standardised bank chip that can be
inserted into any PC, mobile, payments terminal or ATM, in the same way
as a bank card.

You only have one chip, and the plastic bit has gone.

Effectively,
your bank chip is just the chippey bit you currently use on your credit
card.  And that chip is powerful with 10Gb, 100Gb, 1Tb (Terrabyte)
storage and even some dumb intelligence built-in, so you could do
almost anything with it.

It could be multi-bank and multi-function, wirelessly enabled and communicating. 

It’s contactless, cashless, debit and credit payments in home or local currency – you name it.   

Most of the time, for low value transactions, it asks for no authentication but now and then it wants ID.

You then enter either a PIN, provide a biometric or other agreed verification.

Away you go.

Now,
you’re concerned that if the chippey bit is that small, then I’ll lose
it.  But no, because you can stick that chip into anything.

You
might hold that chip in your wallet, mobile telephone, watch, ear-ring
… you could even stick it up your wherever if you wanted (now that
could be a safe harbour).

That’s the short term future of cards as they become chips.

Bring it on.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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