Will New Cards Bring Tears of Joy to Users and Issuers?

T he competition is fierce in credit card land. Attracting new customers and making sure they continue as loyal and regular card users is the challenge for issuers. Rewards points, double airline miles, cash dividends, low percentage rates and other user benefits have become commonplace.

But credit card companies are finding that those efforts may not be sufficient to keep their customers using their cards. They are focusing on redesigned shapes and new technologies to entice customers to keep swiping, flashing and beeping for purchases at stores, gas stations and fast-food restaurants.

Wallets full of plastic for one purpose or another may not be giving men a pain in the pocket or weighing down women's purses much longer. Credit cards may be getting smarter by the minute, but what's really catching consumers' eyes are cards that attach to key chains, belts, money clips or gym bags.

Card issuers and entrepreneurs are hoping electronic keys that use wireless radio frequencies to charge purchases to a specific card, watches with built-in transponders to set off transactions and cards with flashing lights and beepers to call attention to themselves will catch on.

Discover's new 2GO Card, after testing in select Midwestern markets, will be available nationwide this summer. With the same account numbers, credit limits, expiration dates and benefits as traditional rectangular cards, it has a teardrop shape and comes with a protective case that attaches to briefcases - and beach bags. The Discover 2GO works like a regular credit card on all magnetic stripe swipe terminals with the exception of those where the card gets fully inserted, such as at pay-at-the-pump locations.

Discover said the response to the 2GO has been very positive. During the yearlong pilot process, consumers surveyed cited the convenience of not having to carry a wallet or sort through a lot of other cards for the right one. Discover 2GO is the first card of its kind in the credit card industry, and Discover is betting it's the right card for its customers' busy, on-the-go lifestyles.

"We're bringing Discover Card out of people's wallets and putting all of its benefits at their fingertips," said David W. Nelms, President and COO of Discover Financial Services, Inc. "When Discover Card was launched, we were the only major credit card company to offer a no-annual-fee product and a cash-reward program.

"Now, with the launch of the Discover 2GO Card, we are once again changing the industry and at the same time providing unprecedented convenience to our card members."

With so many payments-industry-wide innovations on the horizon, for card issuers and processors alike, the true test for most of these products will be whether they live up to expectation and hype. With Americans virtually drowning in debt at previously unseen levels and merchants skeptical of expensive software and systems necessary to support and operate the new gadgets, this all remains to be seen.