A woman pays contactless with her smartphone for two coffees at a counter
#Payment Technology #Annual Report

Electronic payment: phygital, inclusive, and sustainable

Annual Report
5 Mins.

Paying by bank transfer, card, or smartphone has been routine for quite some time now. Although the volume of banknotes and coins in circulation continues to grow, the number of electronic transactions is also increasing rapidly, doubling worldwide between 2015 and 2021. These forms of payment have become part of everyday life for billions of people, with new products continually being developed. Giesecke+Devrient, a leading provider of solutions for card and digital payments, leverages innovation to make payment methods more diverse, user-friendly, and sustainable.

A number of current trends are rendering card and digital payments even more attractive for providers and consumers alike. One new concept is “phygital” – a term created by combining the words physical and digital. Phygital is being driven by the efforts of banks and financial services providers to offer their customers a seamless blend of online and offline services, which already exists in other sectors. Apart from aligning with people’s expectations, this approach also helps traditional financial institutions to remain competitive and build customer loyalty via multiple channels – from brick-and-mortar branches and payment cards to online banking and smartphone apps.

“Payment cards are a good example of phygital banking,” says Barnabás Ferenczi, Head of Strategy & Marketing for the Smart Card & Digital Payment Division at G+D. After an account has been opened, issuing a payment card is often the next significant interaction between bank and customer. “And like everywhere else in life, first impressions count here,” says Ferenczi. G+D’s Convego® Relate solution allows card issuers to personalize their messages to customers and send updates (e.g. about postal delivery status) digitally at lightning speed, thus making a reliable, welcoming, and modern impression.

Barnabás Ferenczi, Head of Strategy & Marketing for the Smart Card & Digital Payment Division at G+D
“Phygital offerings enable banks to grow their income stream and boost customer loyalty at the same time.“
Barnabás Ferenczi
Head of Strategy & Marketing for the Smart Card & Digital Payment Division at G+D

“Phygital offerings enable banks to grow their income stream and boost customer loyalty at the same time,” says Ferenczi. The current problem is that an estimated one fifth of all payment cards are not activated by customers, which means less revenue and customer contact for banks and other issuers. G+D can digitize activation of payment cards so customers have an even smoother user experience, with the card being activated in seconds on a smartphone via a personalized QR code. Customers who prefer to visit a branch can activate the card there on a self-service terminal. Convego® Activate likewise brings together the best of the physical and digital worlds: instead of waiting for a PIN to be sent separately after receiving their card, customers can obtain an ePIN through the bank’s digital channels and use the card right away.

Let’s get phygital

Order supermarket groceries via an app and pick them up later. View a menu online before visiting a restaurant and pay after the meal by smartphone. Check online how many people are currently at the gym and attend a fitness class an hour later, when things are quieter. Have a say in the temperature at a shopping mall by responding to a smartphone-based customer survey. All of these are examples of the phygital trend. The word is an amalgam of “physical” and “digital.” Banks and financial services providers have also discovered the appeal of phygital and are offering customers the best of both worlds – offline and online.

G+D’s solutions for secure, customer-friendly payment cards have already won many companies over, including global financial services provider PayPal, which issues payment, customer, and corporate cards in a number of countries. G+D was also recently chosen as a provider by fast-growing US company Marqeta, whose customers include fintechs, neo-banks, and other card issuers. G+D will handle all steps of the card issuance process for some of Marqeta’s customers, from the creation of a profile through production and personalization of the physical cards to delivery.

If customers want more than an account and a card, smartphones can serve as a digital wallet for managing payments and storing customer cards, loyalty cards, shopping coupons, etc. Juniper Research predicts that half the world’s population will have a digital wallet by 2024. “People who want to take that further can use their smartphone or tablet to access a full range of digital banking services. In the phygital age, it will be possible to take a virtual tour of a property offered by the bank, for example, or to hold a video meeting with a bank advisor,” explains Ferenczi.

Secure payment when shopping online

Cashless payment is essential for the expansion of e-commerce. Shoppers who order items on the Internet usually also pay right away online, mainly using a stored credit or debit card. That sounds simple but is actually a complex process. To offer customers a high level of security and a smooth shopping experience at the same time, e-commerce providers need an integrated solution that is completely stable and reliable. “That is precisely what G+D has offered since working together with the Swiss company Netcetera, from which it acquired a stake in 2020,” says Ferenczi. Netcetera specializes in software solutions for online payment. In 2021, Strong Customer Authentication became mandatory across Europe for all online retailers taking card payments. Netcetera is a leading provider of this 3D Secure protocol and also Mastercard’s exclusive testing partner in this field. “When shopping on the Internet, it takes just a few clicks to make a purchase and customers can pay with confidence,” says Ferenczi. Another secure innovation is card-on-file tokenization. In this process, sensitive data, such as the card number, is no longer stored in a database where it could be exposed to hacker attacks. Instead, the card data is cryptographically secured. For each purchase made, a unique code is used that can only be interpreted by the bank. “This makes card fraud and data theft much more difficult,” notes Ferenczi.

Promoting inclusion through payment solutions

The availability of cashless payment options varies significantly from country to country. In the industrialized world, almost every adult has a bank account and on average several payment cards. However, in emerging and developing countries the infrastructure is not yet as extensive. G+D is now working to ensure financial inclusion, especially in countries where there are few bank branches. “We supply self-service terminals that issue ready-made personalized payment cards. These can be placed anywhere there are customers – indoor farmers’ markets, market squares, or in government buildings,” says Ferenczi.

Sustainable consumption by card and app

Ecological aspects also play a role in cashless payment. Since the Paris Climate Agreement entered into force in 2016, more than 15 billion new payment cards have been issued worldwide. Because most of these are made of plastic, this corresponds to the consumption of five million barrels of crude oil. As one of the largest manufacturers of card-based payment and security solutions, G+D is playing its part in making the associated use of materials and energy more sustainable. Our environmentally friendly payment card products have been consolidated under the Convego® Beyond brand since 2020. They include a card with a body made of 100 percent recycled PVC. Other products in this range use fully industrially compostable biomass instead of PVC. This substance does not release any additional CO2 when the card is disposed of at the end of its life. “The Convego® Parley Ocean card range, launched in 2021, is especially innovative. It is manufactured using recycled plastic waste from the world’s oceans. This payment card is almost like a membership card: it allows the cardholder and their bank to join the global community of people who are protecting the world’s oceans,” says Ferenczi.

Carbon footprint tracking when shopping – how it works

These and other initiatives around environmentally friendly payment solutions are part of G+D’s comprehensive sustainability strategy, which is focused equally on achieving the company’s own climate targets and helping customers do business responsibly. G+D recently began offering a tool for consumers to use when shopping or making other purchasing decisions: “With the Doconomy Calculator, you can see the carbon footprint of consumer decisions,” says Ferenczi. This digital eco-tool was developed by a fintech startup, one of G+D’s partners. The leading provider of applied impact solutions was founded in 2018 in Sweden, with the ambition to create new measures to tackle climate change. The tool is designed to help consumers accurately assess the environmental impact of their lifestyle choices, from electricity use through transportation to buying groceries. The calculator was designed to offer users an intuitive, fast way to measure their impact – and hopefully make lifestyle changes based upon their findings.

The tropical fruit in the supermarket looks delicious and promises to deliver a vitamin boost. The clothing store has a great offer on T-shirts: buy three, pay for two. And renting a car for a trip to meet friends on the weekend is much more flexible than buying a train ticket and changing twice. Many of the purchasing decisions we enjoy making are unfortunately a bad deal for the environment. People can now use the Internet to find out the true CO2 impact of their purchasing decisions. Doconomy’s Lifestyle Calculator, for example, enables users to see how a purchase impacts the environment. They can then consider alternatives or offset the carbon footprint of the purchase.


Whether phygital, inclusive, or sustainable, cashless payment transactions must always be secure. It is important to be certain that the person opening an account or paying with a card really is who they say they are. Artificial intelligence (AI) is increasingly being used for authentication in this context. When it comes to digital payment, there is much more going on behind the scenes than we realize to deliver security and convenience for customers.

Published: 31/03/2022

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