PaymentsJournal

The U.S. is home to 36 million small businesses—99.9% of all businesses—and roughly 11 million of their owners are already credit union members, according to Velera’s CU Growth Outlook 2026. The opportunity, then, isn’t simply to win new small business members. It’s to turn existing relationships into deeper, more valuable ones. In a PaymentsJournal Podcast, Velera’s Vice President of Marketing Carrie Stapp, and Vice President of Product Management Sheba Carnes, as well as Brian Riley, Co-Head of Payments at Javelin Strategy & Research, discussed how credit unions can capitalize on this opportunity. That means finding the sweet spot between big banks and single-service fintechs—combining the personal service and community connection that small businesses value with the tools and capabilities they expect. Developments in the Market The growth of the small business market comes at a moment when credit unions are facing slower consumer loan growth, greater competition for deposits and continued pressure on margins. Serving small businesses can help address all three challenges: They need lending, they need to maintain operating deposits and they need to use a variety of payment services that create additional revenue opportunities. And this market is growing in ways that play to the strengths of credit unions. AI technology has lowered the barriers for entry to small businesses, allowing entrepreneurs to launch faster and operate more efficiently with smaller teams. With fewer people on staff, these businesses are more likely to turn to outside experts—including their credit union—for help with areas such as payments and data analysis. As those businesses succeed, credit unions should position themselves to grow alongside them. “Many business owners have been forced to look elsewhere as their business grows and their financial needs become more sophisticated,” said Carnes. “We see the industry having a tremendous opportunity to evolve and to become the financial partner that the businesses don’t outgrow.” This is especially important because small businesses rarely rely on just one financial institution. Velera’s study found that 86% of SMBs use multiple financial institutions, with the average business using three. One reason, perhaps surprisingly, is that small business accounts tend to be sticky: Once a business begins working with a financial institution, there is little incentive to switch. As a result, credit unions are not necessarily losing these SMB relationships to other institutions; they are sharing them. The challenge is getting a larger share of the relationship, particularly as a business’s needs become more sophisticated. That’s where credit unions can begin to fall behind. As small businesses grow, they increasingly look for reporting and analytics capabilities, more advanced business rewards programs and payment solutions that allow them to seamlessly move money in and out of their businesses while tracking finances and inventory. If a credit union can’t provide those capabilities, another financial institution or fintech can fill the gap. Personal Service and Beyond This is where one of the credit union sector’s traditional strengths becomes especially valuable. Credit unions have always excelled at service, and small businesses especially value having a personal relationship with someone they can call when they need help. That relationship can give credit unions a meaningful foothold with business owners, but it can’t be the entire proposition. “Winning on trust, service and relationship banking is something that the larger financial institutions and the fintechs are going to have a hard time replicating,” said Stapp. “That allows us to be the differentiator, especially when those small business owners are looking for the consultation and the location of their bankers to be there to help them set everything up and to grow and adjust with their needs.” Personal service alone is no longer enough. Credit unions need to make themselves indispensable to small businesses, both personally and technologically. “Business owners want frictionless onboarding, an intuitive mobile experience and real-time visibility into their finances,” said Carnes. “The expectation now isn’t really choosing between the high-touch service and the great technology. Businesses expect both.” Payments are a natural place to deepen those relationships. They sit at the center of virtually every business operation, from paying suppliers and accepting customer payments to managing expenses. Businesses need help integrating these processes with their other software, and those payment relationships also give credit unions valuable insight into how the business operates. In other words, payments can do more than generate revenue. They can help credit unions better understand their business members and create additional opportunities to support them as they grow. Finding the Competitive Sweet Spot Credit unions are competing on two fronts—big banks on one side and fintechs on the other. Each brings a different set of strengths to the small business market. Fintechs like Stripe offer turnkey payment products that can be easy for businesses to adopt. But their offerings tend to be fairly focused. Small businesses, particularly as they grow, need a more holistic approach to managing their finances.   Large national banks can provide a broad range of products and services, but they can lack the personal connection that smaller businesses value. Credit unions, by contrast, are embedded in the same communities as their small business members. “The big bank strategy is to go in with very aggressive credit lines, because they lack what credit unions have, which is the personal relationship with the customer,” said Riley. “You’re working in the same area. Their business is not out of a New York based business or a large call center somewhere else. And that’s a homecourt advantage that’s really important.” “You own the local market as a credit union in a lot of ways,” he said. “You’re not dealing with some large bank where you’re just an account number—you are dealing with the personalization that goes with going through a credit union.” Key Takeaways The foundation is already there. Velera’s research shows that credit unions are starting from a position of strength when it comes to serving small businesses. “Many of the attributes that they reported directly to us align with all of our strengths,” Stapp said. “The community focus, the personalized service, access to a dedicated banker, all of that consultative approach—in addition to being a low-fee offering, which is really important to these small businesses when they’re getting their feet under them and getting them on the ground.” For credit unions, that means looking beyond the traditional business account and considering where existing relationships can go next. Members who own businesses could be natural candidates for small business relationships, while non-members are prime candidates for developing a full-service relationship. Once these small businesses are under the credit union’s umbrella, they present a wide variety of cross-sell opportunities. And for businesses already on the credit union’s business side, the relationship can evolve as the organization does. Growth may bring increasingly sophisticated needs, including treasury services and back-office management. The challenge is making sure the credit union is ready at every stage, not just to win the small business relationship, but to keep expanding it as the business grows. “Make sure that you’re not allowing your business members and prospects in your general area to outgrow the products and solutions that you have to offer,” said Stapp. “You need to be continually evolving with them. Not just ‘Am I serving their needs today?,’ but ‘Am I equipped to solve where my small businesses are going?’ Utilize that personalized service and dedicated banker model to really understand where those small businesses are headed, so that you can be a step ahead.”

For years, payments have largely fallen into two camps: horizontal platforms built to serve a broad range of businesses, and vertical solutions designed around the specific needs of a particular industry. But businesses increasingly need both. They want the flexibility and scale of a horizontal platform without giving up the specialized capabilities that come with a vertical solution. That’s where diagonal thinking comes in. Rather than choosing between scale and specialization, diagonal thinking brings the two together. With a diagonal perspective, payments infrastructure can serve multiple use cases without sacrificing the depth required for each application. Take healthcare, for example. A healthcare provider may need to manage patient payments, insurance transactions, payroll, benefits and other financial workflows, each with its own requirements. Historically, that could mean stitching together multiple solutions. A more diagonal approach can bring these capabilities together through a single platform while still accounting for the nuances of the healthcare industries. In a recent PaymentsJournal podcast, Stephen Faust, CEO of Dash Solutions, and Jordan Hirschfield, Director of Prepaid at Javelin Strategy & Research, detailed the diagonal approach to payments and the use cases where it can make an impact. While this perspective aims to bring the best of both vertical and horizontal worlds to organizations, the ultimate objective is to make transactions so unobtrusive and embedded that end users can focus on their business, not payments. The Enablers for Change One of the main drivers of more diagonal solutions has been the substantial rise of vertical software providers. According to McKinsey, vertical-specific software now accounts for more than half of payments-adjacent small- to medium-sized enterprise spend.  “One of the big things that was an accelerator for this was COVID,” Faust said. “I heard at a conference someone say, ‘There’s been more changes in payments in the last five years than in the 50 years before that,’ and it’s true. Things are rapidly changing.” Three key factors are driving this shift. First, modern APIs allow organizations to overhaul their payments operations without rebuilding their core infrastructure. This flexibility, combined with today’s digital environment, means more companies are equipped to integrate APIs and work directly with payments providers.  The infrastructure supporting embedded finance is also rapidly maturing. McKinsey research forecasts that embedded payments will grow by more than 30% annually through 2034. Artificial intelligence is another important factor. AI can now handle operational complexity that previously required custom builds or additional staff, making it increasingly feasible to tailor payments capabilities to specific organizational needs. “AI is not only allowing payments companies to move faster and configure solutions more uniquely, but it’s also letting the payers eliminate manual processes on their end,” Faust said. “That’s providing more opportunity for them to look at modernization to drive efficiencies and cost savings, and in a greater user experience. The growth could be more than 30%, the payments industry is expected to continue to boom for many years, and it’s an exciting place to be.” The Legacy Pain Points Along with these technology-driven shifts, organizations are feeling the pain points associated with legacy payment methods. “Where there are greenfield opportunities and where the APIs come in are in some of these spaces that have been difficult to conquer—the disbursements, the reimbursements, and the refunds,” Hirschfield said. “Now, when you add these APIs and new efficiency layers into it, it’s much easier versus going the old school way, like writing a check that no one really wants to do.” “Having these opportunities to engage in technology makes all the smaller markets ready to grow and grow fast,” he said. Beyond the inefficiencies that can weigh down business processes, legacy payment methods can have an impact on the customer experience. Fueled by the digital and mobile ecosystem, customers now expect speed, choice, security, and flexibility—and businesses are increasingly aware of these expectations. Together, these factors are driving an imminent transition in which trillions of dollars in payments will shift from legacy formats to modern protocols.  “When the payer looks on their side and they’re saying, ‘I have all these check processes that potentially are manual,’” Faust said. “’I’ve got reconciliation processes, I’ve got abandoned property escheatment processes, I’ve got check fraud processes, and I’m not delighting my customer, I’m creating a burden for them.” “They want to change,” he said. “Now, AI can eliminate barriers on their side and get them to the point that says, ‘OK, I’m ready to turn this on, and I’m ready to drive that efficiency and that modern experience for my customers, which is opening up these opportunities.’” Diagonal Thinking in Action One of the most compelling examples of diagonal thinking in payments can be found in the large public research university use case. Institutions of higher learning manage massive ecosystems spanning multiple operations, many of which require payment capabilities. However, the needs of each department can be dramatically different. Payments may be issued for employee payroll, student refunds, research participant payments, student-athlete per diems, and employee rewards. What’s more, each payment type can come with its own compliance and reporting requirements. This makes an event like sending a college football team to an end-of-year bowl game a herculean effort for universities, involving the coordination of travel and accommodations for student-athletes, coaches, managers, security staff, band members, and others.  These trips involve an array of payments that may be executed and reported properly, something most universities weren’t built to manage. In this application, a diagonal solution provides a single interface that addresses all the institution’s needs. “Universities are fascinating because they’re incredibly sophisticated organizations in everything they do except business, like getting people paid for all these different things,” Hirschfield said. “They’re so disparate, where you talk about a clinical trial that might be paid out of one thing with one process, paying the athletes and their per-diems out of another payroll, and especially short-term payroll employee and student payments in another.” While this is a challenging process, it is also an area where end users expect payment speed, accuracy, and choice. That has not always been the case at colleges and universities. Traditionally, for example, a student refund might have required the student to visit the bursar’s office, pick up a paper check, and then cash or deposit it. With a diagonal approach, the refund can instead be delivered digitally via email or text message in near real time. The student can click a link and access multiple ways to receive the funds. Depending on the available options, they may be able to receive the refund on a digital prepaid card, via an ACH transfer to their bank account, or even have it sent to their Venmo or PayPal account. “The university is a cool example because we can go in as a single provider and support all those various solutions from one interface,” Faust said. “Now, they don’t have to have a new contract and vendor partner for each of the payments. One can do all of them and they have a single repository platform where they can see all these payments, get reporting, and digitize them and modernize them in an efficient way.” “They’ve got tremendous scale, and they can drop all their scale onto the horizontal platform but have a specific vertical experience for each of these payments, be them restricted, reloadable, consumer funds, corporate funds, or whatever it may be,” he said. The Days of Off-the-Shelf Are Gone While the university environment is ripe for a diagonal approach to payments, organizations across industries can benefit from customizable payments solutions that adapt to their specific use cases. Advances in technology, especially AI, are making this increasingly possible and giving organizations a powerful tool to meet the evolving needs of their customers. However, diagonal thinking is less about customization for customization’s sake and more about combining the scale of a broader platform with the specialization that varying use cases demand. “The days where we build off-the-shelf products that are one-size-fits-all for businesses are over,” Faust said.  Adopting this diagonal approach has become imperative in the current business environment. Moving forward, payments processors won’t be differentiated by the platform offering the greatest scale or the lowest fees. They will be distinguished by their ability to embed payments so deeply and seamlessly into workflows that users can take their presence for granted. “It starts with listening to the industries, understanding what their needs are, and focusing on the features in the technology that matters—versus building a lot of fluff that looks cool but that no one uses,” Faust said. “The people receiving payments expect these things now, and the user experience has to be great,” he said. “It needs to be simple; It needs to be clear. They need to understand why they’re getting paid, and they love the ability to have access to it quickly and with choice on how they want to use it. Those are the things I’d be focusing on if I was going after this market.”

The more banking moves onto a smartphone, the harder it becomes for financial institutions to create a tangible connection with their customers. Yet as more of the banking relationship becomes digital, consumers continue to seek experiences that feel personal and distinctive—from personalized products and luxury brands to rewards, upgrades, and exclusive access.  That creates an interesting opportunity for the physical payment card. Far from becoming irrelevant, the card can serve as one of the few tangible expressions of a customer’s relationship with their FI.   In a PaymentsJournal Podcast, Mikko Kähkönen, Vice President of Card Products at Giesecke + Devrient, and Brian Riley, Director of Credit at Javelin Strategy & Research, discussed how issuers are rethinking the card through new materials, distinctive design, and carefully crafted experiences—turning a familiar payment tool into something that can inspire recognition, loyalty, and sense of status.   A Premium Experience  The premium card offers issuers a physical representation of the banking relationship, often made from innovative materials and designed to be handled and used everyday. These cards can generate greater engagement and, in some cases, a higher share of wallet than standard cards.   “A great premium card design turns into customer segmentation, customer segmentation turns into customer experience,” said Kähkönen. “People enjoy unboxing and showing off the shiny objects they get from their financial institution. That gives a great marketing boost to the program. There’s a lot to be had in premium cards for issuers globally.”  Consumers increasingly want products that reflect who they are and how they see themselves. They value personalization, quality, distinctive design, and a sense of exclusivity. A premium card isn’t necessarily competing with the convenience of the digital wallet. The phone may be the primary payment device, but the physical card serves a different purpose, providing a sense of recognition, identity, ownership, and tangible connection.  At the same time, issuers face a crowded market in which everyone is competing for the same aspirational consumers, from high-net-worth individuals to the mass affluent. The challenge is finding ways to differentiate an offering in a category that is, by design, a commodity. An American Express Black card, for example, doesn’t move through an authorization any faster than a Chase Freedom card.   “That’s where the card design comes in,” said Riley. “It’s a way to distinguish a portfolio. We know from lots of studies that it appeals to people for different reasons, different drivers behind the type of metal, type of coating, and so forth. It really does play an important role in distinguishing customer and adds value to how the card is positioned.”  A Step on the Digital Journey  The most successful issuers are not treating the physical card as an isolated product. Instead, they are making it part of the broader digital journey.   A consumer can go into their bank’s app or website, customize their card, and order it while receiving a digital version immediately. Notifications can keep them updated on the card’s delivery, building anticipation before it arrives. And when the welcome package finally lands, some customers even record themselves opening it.   “The customer feels really recognized before the first transaction with the card even takes place,” said Kähkönen.  In that sense, the payment card may have become more important as consumers’ financial lives have become more digital. From the issuer’s perspective, it becomes a calling card for the financial institution itself.   As branch networks have declined, consumers have fewer opportunities for physical interaction with their banks. A distinctive card helps maintain that connection, keeping the institution physically present in the customer’s everyday life.  From Metal to Ceramic  For that reason, many banks have looked to distinctive materials to make their cards stand out. Metal cards have become a well-established and growing segment of the premium market.   “When I got my first metal card four or five years ago, what I liked about it was when you throw it on a counter, there’s a thump,” said Riley. “You know it’s a real thing.”  But, as with any premium proposition, expectations continue to rise. That’s where ceramic enters the picture—a material associated with luxury watches and jewelry, as well as exceptional durability. Its resilience gives it a sense of permanence that few other card materials can match.  The tactile experience is distinctive, while its weight and feel set it apart from conventional plastic cards and even many metal products. Its unmistakable sound when placed on a table can turn a simple payment moment into a statement.  “The ceramic is really fascinating, because it combines two worlds,” said Kähkönen. “There’s this sort of craftsmanship, and a material which has not really been present in our industry previously.”  Ceramic also allows for bolder color options, because the pigments are integrated into the material itself. Combining zirconia powder and pigments creates different hues, resulting in a sleek, highly crafted aesthetic that can appeal to affluent consumers looking for something beyond the conventional metal card.  “In the premium segment, these innovatively designed cards will become increasingly crafted and personalized,” said Kähkönen. “They may even turn experimental, with the possibility of limited edition card programs that are sold as collectibles.”  Pushing Into the Future  As payment experiences disappear into digital channels and become part of the background of everyday life, the physical card may take on a different role.    “I don’t believe that the physical card is disappearing or anything like that, but its purpose is evolving to membership in a kind of broader ecosystem or, on the other hand, a narrower, more exclusive association,” said Kähkönen. “But the card can also include exciting new features on top of what you see today. You can use your card for authentication to your mobile wallet, or it can be your access and trust anchor into stable coins and crypto, features above and beyond the day-to-day transaction.”  “That’s something we’re committed to,” he said. “That’s our vision also going forward. We’re working on defining the next era of premium payment cards.”

Fraudsters no longer need to reinvent their tactics from scratch. With artificial intelligence and increasingly sophisticated access to consumer data, they can test new approaches quickly, learn what works, and adapt before financial institutions have time to catch up. That speed is forcing banks and other financial institutions to rethink how they authenticate customers. One approach gaining traction is ownership authentication, a process that looks beyond whether an application’s information matches a particular account. During a PaymentsJournal Podcast, John Gordon, CEO of ValidiFi, and Suzanne Sando, Lead Analyst of Fraud Management at Javelin Strategy & Research, explored how this approach can help financial institutions connect seemingly minor signals, identify emerging risks, and stay ahead of the adaptive fraud schemes. A New Generation of Fraud Artificial intelligence has made it possible for criminals to create new schemes and fraudulent identities in a matter of minutes. AI has fueled the rise of several types of scams, including account takeovers and bank impersonation. Some fraudsters use AI to submit account applications across multiple institutions, while others use it to gather information about existing customers, allowing them to mimic typical behavior and evade detection. One way financial institutions are responding to those evolving threats is through ownership authentication. Rather than focusing solely on a new account or one that appears to be involved in fraud, this approach seeks to understand the consumer across their broader financial relationships. It incorporates factors such as ownership, payment history, account stability, and behavioral changes that can reveal emerging risk. Verified accounts generally outperform better than the broader population in terms of fraud outcomes, but those results can improve further when institutions add an additional layer of authentication. Simply verifying that account details match the person opening the account is no longer enough. “Just because an account is open and valid and it belongs to a particular consumer, there are still aspects that drive different decisions for the financial services provider based on fraud and risk connotations,” said Gordon. “If an account is open, valid and belongs to the applicant, if that applicant has an email address that’s less than 30 days old, the increase in risk is skyrocketing.” Taking the Holistic View It’s no longer enough to examine a single aspect of a consumer’s identity or behavior. Matching personally identifiable information (PII) to an account at a single point in time doesn’t provide a complete picture. Financial institutions increasingly need to take a holistic view of the consumer and assess whether the information provided remains consistent over time. “Taken individually, you may miss the signals of a brand new email address or phone number—all these things that maybe don’t seem that that risky on the surface,” said Sando. “When you put them all together, it becomes a serious risk factor for this particular consumer. Fraudsters are bypassing a lot of checks that they normally wouldn’t have in the past because they have AI enabling them.” Fraudsters, for example, may begin an account takeover with seemingly innocuous changes, such as updating a marital status or utility information. On their own, these changes may not raise an alarm. Over time, however, those changes can be combined with a new credit card, a new debit card, and a utility bill to make the activity appear legitimate. Individually, each signal may seem insignificant. Together, they can reveal a much stronger pattern of potential fraud—one that can be missed when institutions examine each signal in isolation. Facing Up to First-Party Fraud Ownership authentication can also play a role in addressing fraud associated with buy now, pay later plans. As these options have become a prominent part of the consumer economy, they have made it easier for people to spread payments over time for purchases they may not be able to afford upfront. For some consumers, even extended payment schedules can become difficult to manage. And as a result, first-party fraud may become a more deliberate strategy for consumers who are unable or unwilling to repay what they owe. “All of those consumers are providing bank account and routing numbers at application, and we have the ability to access all of that data,” said Gordon. “When you look at that information together, you can see the status of the most recent transactions tied to those accounts. Is there a history of stop payments, frozen accounts, or other first-party fraud indicators? By evaluating those factors collectively, you give yourself much greater protection.” “For those of us a certain age, that brings back a lot of connotations from 2008 where the consumer pressures were increasing and increasing,” he said. “And as a result, saying they felt like their best option was bankruptcy.” Convenience as a Risk Consumers often care less about who provides a financial service than whether the experience is convenient. But that emphasis on convenience can create risk, particularly when providers are reluctant to introduce anything that could add friction to a transaction. As research has shown, many consumers will abandon a payment process when they encounter unwanted friction. But merchants and payment processors are increasingly learning that friction doesn’t have to be all-or-nothing. It can be targeted and managed based on the level of risk. For example, if an applicant attempts to open a bank account using information associated with more than four Social Security numbers, that should trigger additional scrutiny. Similarly, if an applicant uses a relatively new or undeliverable email address, the institution may require a higher level of authentication. Consumers may be frustrated by these additional steps, but they are also becoming aware that friction is sometimes necessary to protect their accounts and financial information. The challenge is finding the right balance between a seamless experience and appropriate security. “We’re actually finding now that 50% of consumers are prioritizing the security of their PII that they’ve entered into that application,” said Sando. “If they don’t find that to be secure, they’re going to drop out of that process and you’re going to have abandonment issues.” Key Takeaways Ownership authentication falls under the broader category of “smarter friction.” It means understanding the customer experience, centering the end user, and providing safeguards that consumers can understand and recognize as necessary. Most importantly, it recognizes that every account applicant is different. “There is no one-size-fits-all,” said Gordon. “You’ve got to have the ability to tailor solutions to the application. How well-known is that consumer to you? That should drive a lot of the defense that you stand up.” “You validate what’s happening on that end. You marry that with the risk that you could potentially be facing. And that’s where you get that smarter friction.” Read ValidiFI’s latest intelligence report

The payment card was supposed to disappear. As digital wallets, embedded payments, and mobile-first experiences reshaped commerce, the physical card seemed destined to follow the path of other outdated tools. Instead, it has found a new role—not just as a simple way to pay, but as a platform of identity, access, rewards, and deeper customer engagement.  According to the Federal Reserve’s 2025 Diary of Consumer Payment Choice, credit cards accounted for 35% of U.S. consumer transactions in 2024, with debit cards adding another 30%—making cards, combined, the dominant way Americans pay. That dominance holds even as mobile wallets grow, since most mobile payments are still funded by an underlying credit or debit card rather than replacing one. Their staying power comes from their ability to deliver experiences that extend well beyond the transaction itself. In a PaymentsJournal podcast, Michael Hughes, General Manager of Arculus by CompoSecure, and James Wester, Co-Head of Payments at Javelin Strategy & Research, explored why the physical card remains relevant and how innovative brands are transforming it into a powerful tool for building loyalty, creating new consumer touchpoints, and strengthening relationships between issuers and the people they serve. Consumers Still Value the Physical Card Predictions that digital wallets and virtual payment methods would make physical cards obsolete have not materialized. Much like the continued appeal of tangible products in an increasingly digital world, consumers still value the physical experience of a payment card—particularly as cards have evolved into more premium formats, such as metal designs and customized offerings.  When consumers hold metal cards and drop them on the table, Hughes said, they like the sound and the way they feel, along with a real sense of pride the cards carry. That lines up with consumer research: a global study from Capuchin Behavioural Science found that 72% of consumers would use their payment card more often if it were made of metal instead of plastic. However, the future of the physical card depends on its ability to deliver more than payment functionality. The greatest risk isn’t digital replacement, but becoming a commodity that serves only a single purpose. To remain relevant, cards must continue evolving in ways that create value for both consumers and issuers. Today, cards are already expanding into new roles, including venue access, authentication, loyalty, and rewards. This is creating an opportunity for the card to become a central point of engagement that helps brands build stronger and more meaningful connections with customers. Hughes sees an opportunity to redefine what a payment card can be. “Every issuer wants its card to be top of wallet,” he said. “Traditionally, that just meant being the card a customer reaches for at checkout. Hughes describes a much broader version of top of wallet: issuers can drive additional engagement through the card issuer’s app, prompting cardholders to tap their card to earn rewards, verify their identity, or otherwise interact with the brand. That’s a level of engagement traditional payment cards were never built to deliver. Building Engagement Through Data Advances in data collection and analytics have allowed issuers and brands to better understand customer behavior and create more personalized experiences. A co-branded card with a team such as the New York Yankees, for example, can reveal more than spending patterns—it can provide insight into fan interactions, including visits to Yankee Stadium and other brand touchpoints. “Banks have traditionally issued credit cards to earn fees”, Hughes said. “But viewed from another angle, a card can become an engagement tool—combining programs an issuer would already be offering, like loyalty, rewards, or event access, into a single experience. That shifts the value from simply earning points and interchange fees on payments to delivering customer engagement and the revenue that engagement generates.” Wester added: “We tend to think of use cases in terms of financial or quasi-financial transactions, whether it’s rewards or points or tokens. But ultimately it’s about identifying that person and saying, OK, you are who we want to be interacting with. And now you can take the data from that interaction later and say, we’re going to do things with that.” Authentication Without Added Friction As authentication increasingly moves into software-based solutions, consumers are often required to leave a transaction, retrieve a verification code, and return to complete the purchase. While these processes provide security, they interrupt the user experience and create opportunities for frustration or cart abandonment. “If I can take my branded card and allow [the customer] to validate who they are just by tapping [the card] to the phone, the engagement remains constant,” said Hughes. Physical cards offer another avenue for simplifying authentication while maintaining security. Reducing friction can improve both customer engagement and protection, as overly complicated security processes may discourage users from completing necessary steps to safeguard their accounts. “The weakest link in security is always the person,” Wester said. “The less friction in the process, the better it is for consumers.” Expanding the Role of the Card Because payment cards have been part of consumers’ financial routines for decades, issuers often overlook their potential as a broader engagement tool. A multifunction card can support dozens of new use cases, from loyalty and access to authentication and personalized experiences. Hughes advises picking the two or three use cases specific to whatever customer segment an issuer is targeting, and nailing them. That’s an area he believes Arculus is especially good at helping organizations diagnose—it’s not just about the concept, but about designing the application so it’s simple and easy to engage with, not confusing. Issuers only get a couple of chances before a frustrated customer decides they’re done. The key to unlocking the card’s full potential is creating functionality that improves the user experience while driving greater usage. As engagement grows, the resulting data can help issuers and brands continue refining experiences and building stronger relationships with customers. Hughes’s takeaway for issuers is to align incentives and metrics across product, finance, and merchant teams, then ask a simple question: what value can this card bring customers, and how will you measure it? That discipline, he said, is what separates programs built for the short-term versus the ones that last.  Physical cards were never at risk of disappearing, only of becoming irrelevant. The ones that evolve from solely a payment instrument to an active engagement platform are the ones with a strong future.