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The Credit Cards of the Future

Transaction processor First Data, for instance, recently launched OfferWise, a program that allows merchants to attach offers, coupons and loyalty programs to credit or debit cards and mobile applications. Cardholders enter their credit card account information either online or through their phone so the merchant's specified discount can be applied when the card is swiped at the point of the sale. Online couponing site RetailMeNot, for instance, let cardholders link coupons for Texas food trucks to their credit cards, which could then be used at this week's SXSW music, film and interactive conference and festival.

A similar program is offered by Cardlytics, the company behind Bank of America's (BAC) deal program, which enables cardholders to get exclusive deals from merchants in the form of an end-of-month cash-back account credit.

Both models essentially mirror American Express' (AXP - Get Report) latest feature allowing cardholders to get deals loaded directly onto their credit card after tweeting merchant hashtags from their Twitter account.

But thanks to First Data's recent partnership with CardSpring, consumers won't have to wait for the credit card issuers themselves to come up with ideas and launch additional services. The payments infrastructure company has developed an application programming interface that allows third-party developers to add Web or mobile applications to payment cards.

"It's just like the way mobile phones used to work. You had to wait for the carrier to come out with new features on their phones," CardSpring CEO Eckart Walther says. "Then the iPhone came out and developers could add functionality to your phone. The carrier didn't have to create these functions."

In the future, Walther expects the platform will allow consumers to elect to get digital receipts following all the purchases they make on the card, link frequent-flier programs to their credit cards and put gift cards on select payment methods.

"The whole idea is that more and more of these physical cards and little pieces of paper get turned into software components," he says.

The open market means the possibilities concerning credit cards are endless, but it also means digital payment methods may stand a chance since most of these programs work just as well, if not better, on mobile phones. The app ShopKick, for instance, uses a phone's GPS capabilities to feed customers deals and other rewards when they walk into participating retailers.

"The loyalty angle gives [consumers] incentive to switch their payment methods," says Mary Wisniewski, another blogger with Bank Innovation.

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