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Digital credit cards could change the rewards game

December 11, 2012

Credit card companies have offered rewards for decades, ranging from frequent flyer miles to cash back options.

Credit card companies have offered rewards for decades, ranging from frequent flyer miles to cash back options. These incentives are based on purchases, and may encourage consumers to spend more for a perceived return. With new advancements in technology such as mobile pay, the wave of the future may involve a movement away from a wallet full of credit cards, and accounts will instead exist in a digital space, with transactions processed through smartphone apps.

Other developments, such as cards controlled by computers may change the merchant services landscape. This may bode well for retailers and customers alike, as a variety of payments may simplify purchases.  One major innovation is led by Pittsburgh, Pennsylvania-based startup, Dynamic. It is pioneering a digital credit card that is battery powered and equipped with computer capabilities.

While this card exists outside of the realm of mobile payments, this system is unique because it offers rewards that can be selected by the user. Whereas traditional cards lock users into a single reward, cards such as the one offered by Dynamic allow users to mix and match rewards, or choose to donate bonuses to a chosen charity. This may encourage members to increase spending, which should show gains in online credit card processing.

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