The Evolution of Card Payments:
From Physical Payment to Digital Customer Journey Optimization
Introduction
Card payments in Europe
The story of card payments in Europe is one of rapid innovation, shifting consumer expectations, and the convergence of physical and digital experiences.
For card issuers, understanding this evolution is critical—not just to stay relevant, but to lead in a landscape where cards are one of many payment options, each serving a distinct role in an increasingly digital world.
Card Payments in a Changing Landscape
Cards Compete With Some New Payment Forms, but Also Power Many Digital Payments
While cards remain the most widely used electronic payment instrument—accounting for more than half of all non-cash transactions in Europe 1,2 —many other options are now available.
Below, we explain how cards continue to power a huge variety of payment forms, even in an increasingly digital world:
Cards
Cards are still developing, with virtual and physical formats co-existing to support a wide range of consumer needs, from point-of-sale payments (physical) to major online purchases (virtual).
Digital Wallets
Cards play a foundational role in digital wallets by serving as the underlying payment instruments that are securely stored and tokenised for digital use.
When added to wallets like Apple Pay, Google Pay, or Samsung Wallet, physical card details are replaced with a unique digital token, enhancing security while enabling seamless contactless and online transactions.
All the major “xPay” wallets operate using tokenised cards as the payment method, meaning they do not compete with cards but rather extend their utility into the digital realm.
This integration allows users to make payments without physically presenting their cards, while still relying on the card’s network and issuer for processing.
In this way, cards remain central to the digital payment experience, bridging traditional banking infrastructure with modern, mobile-first convenience 3, 4 .
Account-to-Account (A2A) & Open Banking
Real-time payments between bank accounts are rapidly gaining ground.
Open Banking initiatives have been driving innovation and competition, enabling new services and business models such as request to pay (R2P), in which consumers can choose when and how to pay invoices, and repeat payments for subscriptions and other services.
An example of a new A2A digital wallet is Wero, developed by the European Payments Initiative (EPI), designed to offer a unified, pan-European payment solution.
It leverages the SEPA Instant Credit Transfer (SCT Inst) infrastructure to enable real-time payments between bank accounts—typically in under 10 seconds.
Currently available in Belgium, France, and Germany, with plans to expand to the Netherlands in 2025 and further countries thereafter.
The aim of Wero is to replace legacy A2A solutions such as iDEAL, Paylib, Giropay, and Payconiq.
Buy Now, Pay Later (BNPL)
While instalment payments are not new, the latest BNPL solutions—such as those offered by providers like Klarna—allow consumers to convert eligible debit or credit transactions into instalment plans after purchase, or to select instalment options at checkout.
Such flexibility is driving growth online and among younger consumers.
Increasingly, BNPL is offered by financial institutions and card issuers as a feature of existing products, which shows another area where cards play a crucial role in consumer spending.
National Card Schemes
National card schemes in Europe play a crucial role in preserving domestic payment sovereignty and offering tailored solutions that reflect local consumer preferences and regulatory environments.
While international card schemes like Visa and Mastercard dominate the European market, national schemes still represent a significant share.
Examples include Germany’s Girocard, Denmark’s Dankort, Norway’s BankAxept, and Belgium’s Bancontact, which continue to thrive by offering cost-effective, secure, and widely accepted payment options 3 .
Cash
According to the Payment Association Consumer Behavior report 2025, 38% of respondents use cash at least once per week, rising to 64% using it at least once per month 3 .
Cash usage in Europe is steadily declining, though it remains a significant payment method—especially at physical points of sale.
According to the European Central Bank and recent studies, cash is still the most frequently used means of payment in stores, but its share is shrinking as electronic and contactless payments grow.
This shift has been accelerated by the COVID-19 pandemic and reinforced by government incentives promoting digital payments for efficiency and transparency.
Nonetheless, policymakers continue to emphasize the importance of maintaining access to cash, particularly for vulnerable populations and in crisis scenarios 7 .
The result is a nuanced payment landscape where digital and cash-based systems coexist, with the long-term trajectory clearly favoring digital transformation.
Cards in the Digital Age
The Evolving Role of Cards in a Digital World
Cards are undergoing a significant transformation as they become increasingly digitised through platforms like Apple Pay, Google Pay, and Click to Pay.
These digital wallets offer consumers a seamless, secure, and convenient way to make payments, reflecting a broader shift toward mobile-first financial experiences 4,5 .
Despite this digital evolution, physical cards continue to play a vital role.
Tokenised cards—used in digital wallets—complement physical cards by enhancing security and enabling contactless transactions, while physical cards remain essential for accessibility and backup in various scenarios, in addition to being a very important marketing tool.
Together, they provide a flexible and inclusive payment ecosystem that caters to diverse user preferences and needs.
What’s Next – Or, Why Cards Aren’t Dying
Despite predictions that cards are dying, they remain core to payments—although their role is changing.
Physical cards now serve as both payment method and brand touchpoint, reflecting a consumer’s personal values (think sustainable cards, or hyper-personalized card designs) as well as a commitment to compliance with new legislation regarding accessible financial services for disadvantaged groups.
Cards gain new relevance and functionality when consumers link their cards with digital wallets, effectively extending a brand relationship with its client into the digital world.
This flow-through from physical to digital emphasizes just how important it is for Issuers to keep their cards top of wallet as the world changes.
The New Standard
Optimized Customer Journeys and Omnichannel Payments
As the physical and digital worlds blend with each other, consumers expect to be able to flip between payment methods as they wish.
They might pay for coffee with a card, for instance, then minutes later buying a washing machine online via BNPL.
This means issuers must make their products attractive to consumers both online and in the real world.
Examples of how to do this include issuing virtual cards instantly, automatically integrating cards with your wallet product, and providing a card management app through which consumers can track spending, set limits, manage balances, and access other services.
The Implications for Issuers
Embrace Digital-First and Instant Issuance
As an issuer they should adopt modern card issuing platforms that enable them to issue digital cards instantly, with physical cards as a complementary feature.
This will boost activation rates and customer satisfaction and is essential to compete in an increasingly competitive landscape.
Sustainability and Inclusion Are Table Stakes
Two-thirds of consumers expect their issuer to be sustainable, and accessibility is now a legal requirement across Europe and North America, as well as in other regions.
That means that banks or other financial institutions should take into consideration issuing cards made from sustainable materials, and introduce options like braille cards, voice-activated cards, and notch cards as soon as possible.
Emphasize Experience, Not Just Tech
As A2A and Open Banking payments grow, cards can be differentiated through great user experiences like personalization, rewards, and seamless integration between physical and digital channels.
Moving forwards, it’s important to create frictionless, invisible payments that fit naturally into customers’ lives both online and at point-of-sale for a true omnichannel experience.
Data for Cardholders
Issuers should provide cardholders with easy-to-understand, real-time access to their transaction history, plus spending analytics and personalized insights.
This will build trust while helping users to manage their finances more effectively.
Rich data insights can also help to tailor offers, rewards, and new product features to build loyalty and keep your card top of wallet
Expand Self-Service Features
By using digital apps, issuers can empower cardholders to view and update PINs, control card status, and manage transaction limits—all in real time.
Evidence proves that card management apps increase spending, encourage card activation, and improve customer satisfaction.
Prepare for a Multi-Method, AI-enabled Future
As we’ve shown in this article, cards are just one option for consumers.
To keep their card products relevant, Card Issuers must adapt – to ensure they are flexible enough to meet changing consumer preferences and developing regulatory requirements.
We’ll also see the rise of autonomous AI agents over the next five years—digital assistants that can transact, negotiate, and manage transactions on behalf of users.
To support this new wave, it’s important to explore real-time, low-cost, programmable payment rails and robust security frameworks.
A New Era – Are You Ready?
Implications for the future
The future will belong to Card Issuer’s that can deliver secure, seamless, and sustainable card experiences in every channel.
Tietoevry Banking’s end-to-end card issuing services empower you to do just that. From instant virtual card issuing and advanced personalization through to sustainable card materials and card management apps, we provide fully integrated services across the value chain that are tailored to your needs.
Contact us today to discover how our card issuing services can future-proof your payments offering and keep your institution at the forefront of innovation.
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At Tietoevry, we believe it’s time to shift perspective. It’s not about what technology can do anymore — but what it should. So that the futures of businesses, societies, and humanity can live and thrive. Side by side.
