All Hail the New Coin?

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15 November 2013
Zilvinas Bareisis
In the last day or so, the news of Isis national launch (see my earlier blog) nearly got drowned by all the excitement generated by Coin. Dubbed as an answer to "Costanza wallet", it is a single card to which you can link up to eight of your regular payment and loyalty cards. At a checkout you decide which of those cards you want to use by pressing a button on your Coin card, which instantly re-programs the Coin's magstripe with appropriate details. From then on, the transaction is exactly the same as with a regular card, which is a huge benefit, as it minimizes what you as a customer have to learn and merchants don't have to change anything to accept it. To link the cards in the first place, you get a Square-like dongle, which allows you to swipe the cards to capture the details into the Coin app. Add the card image to help you choose between cards, and you are good to go. The app would only accept cards issued in the same name as the one registered on the app. The idea is not entirely new. For example, it is very similar to the Dynamics card which can also re-program a magstripe at the touch of a button. Wallaby Financial also offers a single card to replace all other credit cards, and in fact, promises to add intelligence by automatically selecting the card for the customer based on optimizing the rewards. In fact the similarities with Dynamics are such that Sean Sposito, an American Banker journalist, tweeted yesterday asking if there might be some patent-related issues here. However, the big difference between the two offerings is that Dynamics has been working with the issuers and has in the last year re-focused its efforts on loyalty play via its ePlate card. Coin is a consumer-oriented product - a customer has to buy it just like they would buy a leather wallet. And that is one potential challenge Coin will face when trying to gain mass adoption. When it launches in 6 months, it will cost $100, although it is possible to pre-order one now for $50 plus $5 shipping charge. The company exceeded its pre-order target of $50,000 in just 40 minutes, so it clearly captured the imagination of a 1,000+ early adopters. Whether the average "man on the street" will be willing to fork out remains to be seen, although I suspect the prices will drop with scale. Also, apparently the card's internal battery will last for 2 years, so the customer will have to replace the Coin card more frequently than their regular plastic cards... In addition to reducing the bulge in consumer wallets, Coin seeks to solve a familiar problem of customers leaving their cards behind after a payment (e.g. at the restaurants). The Coin card communicates with the customer's phone via Bluetooth and automatically disables itself if the phone is out of reach for more than 10 minutes. Which is great for security, but might present problems for customers when their phone battery runs out. There is also a question of branding. The prototype card looks very simple and cool, but understandably does not carry any network or issuer brands. In that sense it is similar to PayPal and other digital wallets which can carry multiple cards, but at least with digital wallets, the customer is still exposed more frequently to the card image and related branding via the phone screen. In this case, once the cards are loaded, they are replaced with a short nickname which is used to select the card when pressing a button. Finally, I am aware that there has been slow progress on EMV migration in the US so far (look out for my upcoming report on that subject), but 6 months down the line when Coin is due to start shipping, we should have a better sense of when EMV is going to arrive at scale in the US. And when it does, I don't think the issuers will want their expensive EMV cards be hidden behind a fancy although still magstripe card. Will Coin have to be upgraded before it gains any real traction? Undoubtedly, Coin is a slick product and certainly got our attention. I am sure there will be quite a few real customers that will want to have it as well. However, the payments Holy Grail might be as unattainable as the real one, and my prediction is that Coin will simply join the growing plethora of solutions that the customers and merchants will be choosing from.
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