January 2022

The Ever-Evolving Credit Card Landscape: What to Expect in 2022

As we enter the new year, we find ourselves oscillating between feelings of excitement and uncertainty. It’s been almost two years since the COVID-19 virus began its dramatic reengineering of our personal and professional lives, and it can feel dangerous to get our hopes up about anything. But when it comes to the credit card landscape, the changes over the last two years have been so dramatic and unprecedented that we have a few ideas about how the coming year will unfold.

Consumers aren’t who they used to be, and banks and financial institutions are doing everything in their power to understand and accommodate a wide range of new habits and preferences. Moreover, advancements in credit card tech have accelerated significantly over the past two years, and as a result, digital transformation for credit card providers has become less of a strategic play and more of a survival tactic.

At Deserve, we are proud to lead the credit card industry into the future, which means we think a lot about what’s next. Here are some trends we expect to see develop in the credit card landscape in 2022.

Rewards Programs Will Continue to Advance in Creative Ways

With unpredictable international travel restrictions, many consumers remain hesitant to make any big vacation plans, and the credit card industry is responding by shifting the focus of their rewards from travel bonuses to cash-back programs and unique, customized incentives. Today, many consumers are earning points toward everything from fancy dinners to essential purchases like home appliances.

Due to the recent success of innovative rewards and loyalty programs, more businesses than ever are capitalizing on this trend by building custom credit cards for their consumers. With comprehensive, state-of-the-art card programs available like Deserve’s, businesses can customize their card programs to include rewards in crypto, investments, and so much more. As the evolution of consumer habits and preferences continues to unfold, businesses will need to innovate fast, further solidifying what Forbes has described as a new era for credit card rewards.

Cryptocurrency Inching Closer to Mainstream Adoption

Speaking of innovative rewards programs, the emergence of crypto-rewards cards in 2021, such as BlockFi’s Bitcoin Visa Rewards Card*, seems to signal the rise of cryptocurrency as a mainstream asset. Between the renaming of the iconic Staples Center in Los Angeles to Crypto(dot com) Arena, and credit card legacy players like Visa and Mastercard actively expanding their involvement in the market, there are a growing number of indicators that 2022 will be an eventful year for cryptocurrency and the credit card industry.

Innovations in Fintech and Digital Payments Will Shape the Future

As has been the case in recent years, we expect the broadest diversity of innovation to come from the rapidly evolving fintech space. Advancements in fintech have been so staggering lately that it’s hard to point to any one development as the primary indicator of an increasingly cashless future. But more than simply doing away with paper cash and plastic cards, advancements in the digital payment space are in a position to revolutionize the way both businesses and consumers spend, receive, and manage funds.

Technologies such as blockchain, BNPL, open APIs, and cloud-native platforms promise to make payments not only faster by a significant margin, but also incredibly more secure in light of an uptick in data breaches and cyber-criminality. Among countless other applications, novel technologies emerging from the fintech space will likely optimize and expand the use of digital wallets, accelerate the instant issuance processes of credit providers, and facilitate further innovations in the thriving banking-as-a-service (BaaS) industry.

Buy Now Pay Later Will Take a Victory Lap

Buy Now Pay Later (BNPL) platforms have recently been taking the world by storm. For reference, in October, they were projected to generate around $100 billion in sales by the end of 2021. While on the surface BNPL appears to be little more than a hyper-modern version of layaway, allowing consumers to purchase anything from expensive exercise equipment to moderately priced jewelry in a series of installments, the true novelty of the BNPL model can be found in its leveraging of technology to reinvent the consumer experience. Merchants, banks and fintech institutions alike seem to be attracted to the model’s unique ability not only to exist as an enticing alternative financing option for consumers, but also as a driver of sales in the e-commerce space. And while some have raised concerns about the trend, particularly the potential for widespread defaults, many expect the BNPL industry to continue to gain momentum in 2022, with Insider Intelligence projecting up to $680 billion in transaction volume by 2025.

Expect the Unexpected

Of course, we are living in uncertain times, and there are a number of unpredictable variables that could very likely impact the credit card landscape in 2022. First of all, the possibility of new COVID-19 variants emerging one after another throughout the year isn’t off the table (looking at you, Omicron). Secondly, due largely to the novelty of certain technologies and trends in the digital payment space—BNPL, cryptocurrencies, blockchain, etc.—there is a very high probability of regulations emerging that, for better or worse, will influence how the future of digital finance unfolds. But regardless of the ongoing uncertainty, we are leaning into our excitement as we head into the new year, and however it ultimately develops, we’ll be sure to keep you updated right here on the Deserve blog.

* The BlockFi Rewards Visa® Signature Credit Card is issued by Evolve Bank & Trust pursuant to a license from Visa U.S.A. Inc.