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The Unfulfilled Promise of ‘Smart’ Credit Cards

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The idea seemed brilliant in its simplicity: Combine all the credit cards in your wallet into one slick, card-sized gadget with a chameleon-like magnetic stripe that could be swiped anywhere. All-in-one cards promised the end of bulging wallets forever.

Coin, the first well-funded entrant into the category, made a huge first impression thanks to a slick social media campaign and viral videos — one was seen 10.2 million times on YouTube. Imitators like Plastc and Swyp jumped in on the excitement and into the fray.

Frank Barbieri, a tech enthusiast and investor, was among the first to spot and share an ad for Coin.

“I was excited about the promise,” said Barbieri, who paid $50 on the spot to get in line to be among the first Coin customers.

The company said it wanted to raise $50,000 via pre-orders when it opened the doors on Nov. 13, 2013.  It reached that goal — theoretically, 1,000 orders — within 47 minutes.

But minutes have turned into hours, days, and years … and those early enthusiasts are still waiting for their one card to rule them all. Coin has come and gone. Its wearable payments technology was sold to FitBit in May, and the company stopped producing its flagship product. What’s left of the category seems little more than Facebook pages where frustrated consumers beg for the status of their pre-orders.

Failure to Launch

 

Plastc, which was considered a close competitor to Coin when it launched in October 2014, is currently taking orders for its $155 product but has yet to ship a product. In a Facebook Live post in September and in an e-mail sent to customers*, the company said it has 80,000 pre-orders and has raised $9 million in revenue since its launch (*Updated on May 2, 2017: This has been updated to reflect the source, which was a Facebook Live video posted on the now-defunct Plastc Facebook page and also an e-mail sent to Plastc customers from Plastc CEO Ryan Marquis on Sept. 13, 2016). But it has repeatedly disappointed consumers with delays. Earlier this year, the ship date was bumped from April to August or September, according to a message attributed to CEO Ryan Marquis and posted on several online venues, including Reddit. The message offered consumers an opportunity to get a refund, but Marquis urged folks to be patient.

Graphic For Story Card

 

“I hope you stick around. Plastc Card is going to be an AWESOME product,” he wrote.

In July, the company announced another delay, blaming a typhoon that wreaked havoc with its parts suppliers in Asia. The release date was pushed into the fourth quarter of 2016.

When we reached out to Plastc, the firm said it was shipping orders “in late Q4 (Nov/Dec) of this year.”   But separately, CEO Ryan Marquis said on a Facebook video released in late September that only a small group of buyers would receive their cards this year, as part of a test group, and the rest wouldn’t be shipped until next year.

“Stop lying to your (way too) loyal customers about when this outdated product is going to ship,” wrote Steve Bierfeldt on the firm’s Facebook page. Bierfeldt, a 30-something who lives in the New York City area, told me he ordered the product more than a year ago. After this latest delay, he requested a refund.

During a Facebook Live chat on Sept. 29, 2016, Plastc CEO Ryan Marquis apologized for production delays.
Plastc CEO Ryan Marquis apologized for production delays during a Facebook Live chat on Sept. 29, 2016.

“I hope you stick around.”

“They’ve missed 3 or 4 public deadlines, and there is nothing to indicate they have a working prototype, much less a finished product,” Bierfeldt said. “It certainly seems they are stringing along customers and hoping the bottom doesn’t drop out. I hope they can pull it together because the idea of the product is a good one.”

Plenty of Plastc consumers aren’t convinced the product will ever arrive, and aren’t shy about complaining. On Plastc’s Facebook page, the firm is currently offering a T-shirt giveaway, leading another buyer to write, “Want my card not a damn T-Shirt.”

Plastc did not answer additional questions about the consumers’ frustration.

Michigan-based Stratos card got a lot of attention when it launched and began shipping some all-in-one cards in May 2015, but in another sign of how tough the market is, the firm nearly went under less than a year later. At the 11th hour, Stratos sold to Ciright One, a Pennslyvania-based firm working on a similar product. Ciright’s “One” card will pitch a slightly different angle, promising to help consumers keep track of their gift card balances, while also allowing use of credit cards.  The firm’s website says its One Card will ship in 2017.

Bad Timing and Mixed Results

Bad Timing and Mixed Results
Plastc, which is currently taking orders for its $155 product, says it has 80,000 pre-orders and has raised $9 million in revenue. But it has repeatedly disappointed consumers with delays

Why are all-in-one cards, and their elegantly simple idea, such a dud? There are plenty of reasons.

The key technology involved, which predates Coin, is called “dynamic magnetic stripe.” Installed on a gadget like Coin, it would theoretically allow consumers to load multiple cards onto the same device.  Then it would change, chameleon-like, so it would look like the original bank-issued piece of plastic to any point of sale terminal. Fine so far.

But Coin and its ilk had bad timing. Barbieri was lucky enough to get an early version of Coin, but he found he could hardly use it anywhere. Just as Coin arrived, stores began abandoning the magnetic stripe in favor of EMV chip debit and credit cards. Coin had no way to deal with that.

“So it was a complete bust. [I] had to carry cards anyway,” Barbieri said.

But the chip issue is just the beginning of the problem faced by all-in-one card makers, says James Wester, a payments analyst at IDC Financial Insights. He’s not surprised that gadget makers shipwrecked while trying to change the way consumers spend money. Many tech firms have run aground before.

“Trying to participate in the payments space is very hard,” Wester says. “A lot of folks who try, find out the hard way.”

For starters, Coin and its imitators had to do the near-impossible: compete against a product that’s free and simple. Bank plastic doesn’t cost anything and works pretty much immediately. Cards like Coin cost money and have to be loaded and maintained.

“Is [carrying too many cards] a problem worth paying $50 to solve?” Wester asks. “When your largest competitor is a free product, that’s going to be really hard.”

As is clear from the continuing angst over conversion from magnetic stripes to chips — not to mention the fits and starts suffered by giant entrants Apple Pay and Google Wallet — old consumer payment habits die very hard. People don’t want to have to think about how they spend money; they just want it to work.

Coin, which had shipped two versions of its product, gave up earlier this year and sold its technology to Fitbit. A message sent to CEO Kanishk Parashar wasn’t returned.

Silver Linings

The long-awaited Swype card shipped its first batch of cards this summer, after prolonged delays. However, the card has one major flaw: it is not EMV chip-enabled.

Swyp shipped its first batch of long-awaited cards this summer after prolonged delays. Users are already complaining about the card’s major flaw: it is not EMV chip-enabled.

Not that all all-in-ones are giving up. Swyp, which promises a similar product it calls the “smart wallet,” shipped a batch of cards this summer to consumers who pre-ordered them.  But these cards suffer from the same problem as Coin’s first batch: they only work as magnetic stripe cards, and can’t be used to complete EMV chip transactions.

Swyp is no longer taking pre-orders for them.  The firm says on its website that the cards will go on sale next year. It also says Swyp will support both EMV and NFC in the future, but doesn’t say when.

Wester, who comes across as very cynical of all-in-one cards, thinks that firms like Plastc might actually have a window of opportunity created by the current chaos in payments. Consumers are still frustrated by the clunky changeover to chip credit and debit cards, and the associated slowdowns at checkout. Adoption of mobile phone payment or other schemes using wireless Near Field Communication (NFC) tap-and-pay technology has been sluggish too.

NFC-enabled plastic allows “contactless credit cards,” which are popular in Europe, but are nearly unavailable in the U.S. And that could be an opening for a card like Plastc. (On its site, the firms says it will support NFC, but not chips, at launch). Tap-and-pay NFC transactions can be nearly instantaneous, which might attract consumers and create a value proposition, Wester said. And if they are integrated into wearable devices, which is Fitbit’s master plan, they could give runners an easy way to grab a bottled water without slowing them down.

Still, Wester repeated many times, creating a brand new form of payment is among the most challenging areas of technology innovation. It’s so challenging that he offers his entrepreneurial friends this advice:

“If you have money to burn on a smart idea, don’t go into payments,” he said. And if you have money to burn on a product, consider spending it on something other than a pre-order for a payments gadget.

Bob Sullivan
Bob Sullivan |

Bob Sullivan is a writer at MagnifyMoney. You can email Bob here

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