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payments, and mobile-first experiences reshaped commerce, the physical card seemed destined to follow the path of other outdated tools.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.
