The rise of mobile payment is a reality. Some online banks have embraced this payment method, followed by more traditional banks. While the formula is appealing, it has its advantages and disadvantages.
We are starting to see more and more people paying for their purchases with their mobile phones. This so-called “virtual” bank card has all the advantages of physical plastic cards with a chip, but it is stored in your electronic wallet (also known as a wallet) on your mobile phone rather than in your physical wallet. Like the traditional card, the virtual bank card is encrypted, secure, and easy to use for online or in-store payments with contactless technology. At BoursoBank (formerly Boursorama Banque), a subsidiary of Société Générale, one in five new clients chooses this option.
The new bet of online banks
BoursoBank launched its 100% dematerialized e-card offer at the end of 2023. One in five new clients at BoursoBank chooses to forgo a physical bank card and opt for the dematerialized version. In the first quarter of 2024, nearly 80,000 clients chose to store their virtual card on “wallets” like Apple Pay, Samsung Pay, or Google Pay. Other digital banks like Revolut or Hello Bank are adopting the same strategy. These online banks have chosen to offer their clients the option to open an account with a virtual card, reducing their own costs since the plastic card no longer needs to be produced or sent. This formula is finding its target audience, and other more traditional banks also seem to be following this trend. “Having my card on my mobile phone is very convenient, provided I have a good internet connection,” says Sophie (35). “I no longer forget it and no longer fear losing it. Like my phone, it goes everywhere with me!” At BforBank, each physical card is accompanied by a virtual card. Instantly usable, free, and 100% secure, it is “the best asset for impatient buyers,” admits the online bank.
Could the bank card disappear?
It is still early to say whether the bank card will disappear or not. According to the Observatory for the Security of Means of Payment, the use of the bank card remains the preferred payment method for the French: its share in transactions has increased from 58.9% in the first half of 2022 to 61.9% in the second half of 2023. In particular, contactless payment continues to grow dynamically (+16% in volume and +21% in amount), marked by a real boom in mobile payments, accounting for 8% of payment flows. The amounts exchanged via a digitalized card increased by +114% (+103% in number) over the same period. “I already have difficulty with contactless payment, even though the solution makes my life easier by not having to remember my code,” says André (65). “I have the feeling that we no longer know what we are spending in the end. With cash, you see when the wallet empties. I fear that with digitalization, the value of money will be lost. We can see this with bitcoins, which are no longer a means of exchange but of value creation.”
Advantages
The BoursoBank formula is indeed appealing. The card is 100% free, while clients who do not choose this option are charged between 5 and 9 euros if no payment is made during the month. Young people use their physical card very little, if at all, and mainly use their phones. They are the main clients of this new offer. BoursoBank, with more than 6 million clients, wants to invest in the future with this young clientele that it is thus loyalizing. Hello Bank, the mobile bank of BNP Paribas, offers the Hello One virtual card at 0 euros per month subject to use and offers free instant transfers and immediate debits.
This trend towards digitalization is also observed by the German online bank N26, which has been active in France since 2020, offering this solution to its clients. The Covid effect has had an impact on the rise of this dematerialized payment offer. Between 2021 and 2024, the share of clients using only a virtual card increased by 33% at N26, capturing more than a million clients. Among the observed advantages, the dematerialized card is considered the safest bank card. Indeed, it is difficult to steal, protected by a pin code, and does not contain your sensitive data.
This virtual card can be managed directly from your smartphone. Thus, if you suspect your account has been compromised, you can lock it. This limits the risk of fraud. When making an online payment with a dematerialized bank card, you do not need to enter all the card information, allowing for faster transactions without the risk of typing errors. When you make a payment, you receive a real-time notification with the amount paid, which can help you manage your money, of course, provided you read the notifications.
Barriers
The barriers to the growth of mobile payments seem few. The health crisis has notably accelerated the development of e-commerce or cashless businesses. However, one of the remaining barriers is mainly related to the withdrawal of cash, which is impossible with a digitalized card at ATMs and does not allow for payment at automatic teller machines. Be cautious with the use of dematerialized bank cards, which are not yet widely accepted. Some establishments may refuse payment by e-card. Another barrier is the fraud rate of mobile payments.
According to the Observatory for the Security of Means of Payment, the fraud rate of mobile payments, even though it has been divided by three compared to 2022 (0.024% against 0.061% in 2022), remains present. This is mainly explained by the strengthening of fraud risk management tools, by the systematic use of strong user authentication of the virtual card holder implemented and controlled by their bank. Although they are just as secure as traditional cards, many people are concerned about their banking information. Finally, beware of additional fees as some banks may charge fees for using an online bank card. This may include activation fees, annual fees, or even hidden fees. To avoid this, it is important to inquire with a consumer protection association.