Why smartcards are not the smart choice for loyalty

Smartcards were developed as the replacement for magnetic stripe cards, and as such have been deployed in many environments. But the costs of these cards are still quadruple the cost of their magnetic or bar code predecessors, and there is now an opportunity for other technologies to make a comeback.

The reason for this is that communication networks are now much faster, making the option of verifying online at the point of swipe/scan not only viable, but preferable. At Loyalty Pro, our terminals now use 3g/4g WIFI, and within a couple of seconds they can update the screen with large amounts of data, personal buying preferences, and even passport-style photo to use for identity verification. Of course, it will not stop there. 5g is already being specified with roll-outs proposed for 2020.

Consider this: Smartcards are individually encrypted meaning that personal data is more secure than on a magnetic stripe. They can hold more data than a magnetic stripe card, and are much more difficult to duplicate.

However, online systems don’t need to hold anything on the stripe other than the ID number; all other information passed from the connecting database, which can be behind any set of personal verification questions, is deemed necessary.

Smartcards can hold buying preferences and extra contact information that the technology doesn’t have capacity for. But this becomes quickly out of date and you can’t update a Smartcard remotely when your data requirements change. It’s therefore much better to get this data from an online server for up-to-the-minute accuracy.

Some may say ‘that’s all very well, but what if the network is down and online updates aren’t available?’ Modern counter terminals, such as the tablets supplied by Loyalty Pro for POS use, have the capacity to store thousands of transactions offline and the intelligence to transfer them when they detect the network is available again. When you add the fact that Smartcard readers are expensive and have compatibility issues (due to the lack of encompassing standards across Smartcard brands), there is a compelling case for loyalty/ID applications, which reduce your outlay by a substantial 75% per card.

Whilst it may be true that all cards could become obsolete in the future, as a result of having the ability to hold a virtual card on a smartphone, or even wearable technology (such as a smart watch), we have take-up for that at Loyalty Pro. We also have a significant proportion of Loyalty users who are not so tech-savvy, and we see offering cards being a choice for our customers for many years to come.

Find out more about what we can offer you here.