Card payments continue to gain importance in Germany. Between 2018 and 2024, the number of annual debit card transactions rose from 3.9 billion to 10.9 billion. At the same time, as payment transactions are increasingly shifting to smartphones and smartwatches, the role of physical cards is changing, even as the underlying card technology is being used more frequently. For banks, this changes the requirements for their card offerings. As competition for customers and market share intensifies, their ability to integrate cards into digital payment experiences and differentiate their offerings is of growing importance. Giesecke+Devrient (G+D) outlines the key questions.
The physical card still matters. What sets it apart?
Even in an increasingly digital banking environment, the physical card remains an important part of the offering. This is particularly evident among fintechs. Even providers that have built their business models around digital processes continue to issue physical cards to their customers. The card is more than just a payment method. It provides a tangible touchpoint with the bank and accompanies customers in their everyday lives. For established banks, this raises the question of how they can best position their card offerings against the competition. Design, materials, personalization, and seamless integration with digital wallets can all help shape the customer experience and strengthen the brand.
Is the physical card really indispensable in the age of digital wallets?
Yes, because with card-based wallet payments, the card itself remains the central and secure payment instrument in the background. In many digital wallets, the card appears as a visual element. Its design remains the same even when payments are made contactlessly. Added to this is the practical reality that cards work without a battery, network connection, or apps. For older adults, people with physical disabilities, and those living in rural areas with poor network coverage, a physical card is often the only reliable payment option besides cash. Physical cards are therefore also a matter of social inclusion; an aspect banks could place greater emphasis on in their strategies.
Who will shape the future of payments?
Banks can expand their cards beyond their basic payment function and turn them into platforms for additional services. Virtual cards provide greater online security through tokenization. In the future, physical cards could combine identification, authentication, loyalty programs, and perhaps even identification. This puts banks at a turning point. If they do not capitalize on this potential themselves, they will leave the most important customer touchpoint to other platforms or Tech companies.
One bank for many lifestyles
In a market where terms and conditions and apps are becoming increasingly similar, the physical card is emerging as a key differentiator. By offering a distinctive card, banks can put appreciation and a sense of belonging directly into their customers’ hands, while the traditional card continues to play a central role in serving the broader customer base.
“The decisive question is not whether the physical card has a future, but who will shape it,” says Mikko Kähkönen, Head of Payment Cards Portfolio at Giesecke+Devrient. “With the card, banks have a unique physical source of trust that no app or wallet can easily replace. Those that fail to actively protect this position ultimately risk handing it over to platform operators, for whom the relationship between customers and financial service providers has long been a key target market segment.”
