National Australia Bank will soon offer a credit card that customers can use without having received the physical piece of plastic, as banks rush to bulk up their "digital wallets".
As part of a mobile banking overhaul, the lender will in the coming weeks launch an app that allows consumers to sign a "digital contract" for a credit card.
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Customers can then upload the card's details to a smart phone, and use it to make contactless payments of less than $100 before the card arrives in the mail, the bank says.
"We believe this is a world-first for credit cards," Angus Gilfillan, general manager of consumer lending, said of the digital contract.
Like several rivals, the bank offers contactless payments through its app on Android phones. However, customers with iPhones must attach a tag to their phone to make tap-and-go payments, because NAB and other banks are in a fight with Apple over the technology giant's payments platform.
The NAB credit card change is a sign of banks betting that consumers will become increasingly comfortable making purchases on their smartphones, after technology giants Google and Apple have both launched their digital payments services in Australia recently.
Phones have been able to make digital purchases for several years, but lenders believe paying on the devices will take off in popularity after the technology giants' entrance to the Australian market, and when Sydney's transit system allows customers to use any debit or credit card instead of the "Opal" in 2018.
Shayne Elliott, chief executive of ANZ Bank – the only major lender offering Apple's payment service – predicted in July that "digital wallets" would take over from plastic cards in less than a decade.
Mr Elliott also flagged in July that a realistic option was to offer a "virtual card", which would go further than NAB's plans by offering a credit card account with no plastic at all.
NAB's scheme comes after it last year teamed up with payments giant Visa, in a move intended to boost innovation in the credit card market.
Under the new NAB mobile app, which it is launching this year, NAB says customers will also be able to restrict certain types of spending, such as online purchases, on "secondary" cards held by other family members.
The app will also allow customers to block their card from making purchases if they think their card is lost or stolen.
"Customers are telling us they want more and more control around how they manage their card," Mr Gilfillan said.
Mobile banking has boomed in recent years, becoming the dominant channel through which customers manage their finances, so lenders are competing fiercely to improve their digital offerings.
Against this backdrop, Macquarie this month unveiled a new app that it said would be able to predict customers' upcoming bills and their future cashflow, among other firsts.
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