Rocky start for wallet-slimming 'universal cards'
By Jeff Wuorio | Published: August 13, 2015
Imagine one card effectively taking the place of all the other plastic you carry. You could slim down that overstuffed wallet and still have everything you need at your fingertips.
Several companies are working on just such a product, with varying degrees of success in bringing it to market. Unlike smartphone wallets such as Apple Pay and Google Wallet, these so-called "universal" cards employ a magnetic stripe, so they can be used anywhere credit cards are accepted.
That may sound appealing on paper, but critics say the idea is doomed to a modest life span, thanks to changing technologies and lack of a compelling benefit.
Companies that have developed universal cards include Swyp, Plastc, Coin and Stratos. Although there are differing wrinkles, each card's function is essentially the same. It replaces the bulging wallet with one piece of plastic that contains multiple card accounts.
Although some of the apps allow you to upload an unlimited amount of accounts, the cards themselves hold fewer. Swyp can store as many as 25 cards at a time, Plastc can manage up to 20, Coin can handle eight and Stratos offers a capacity of three cards. You can select the specific account you want to use when you make a purchase.
Stratos co-founder Thiago Olson characterizes his company's card as "iTunes for credit cards." "We're basically doing what the iPod did to your CD collection," he says.
(Stratos was the only company in this story willing to chat about its product. Attempts to contact other universal card manufacturers proved unsuccessful.)
Loading and using the cards
The setup for all of the devices is similar. You enter your information into an app by swiping your traditional credit cards, debit cards, loyalty cards, even library cards through a small reader that attaches to your smartphone. Using a Bluetooth connection, the app loads all the account information onto the universal card.
In some cases, the card holds only a portion of the accounts you've loaded onto the app. For instance, you can input as many accounts as you want into the Stratos app, but the Stratos card holds only three of them for quick access. "We found that people use three certain cards 90 to 95 percent of the time," Olson says.
To choose the card you want to use at the register, you'll either tap the card (Stratos) or push a button on the card. Coin, Plastc and Swyp are all equipped with small displays to show what you're doing. Stratos just uses LED lights representing each of your cards.
All of the cards work in basically the same way with a few differences.
- Stratos and Swyp can "learn" your shopping habits and recommend the optimal card for a particular transaction. For instance, if you're about to purchase something at Best Buy, the Stratos card will remind you to use your Best Buy card to earn rewards.
- The Plastc app can also be used for budgeting and tracking transactions, similar to Mint.com.
- Coin is not as widely accepted as the others, because of the way its magnetic stripe is configured. While traditional mag stripe cards store data on at least two tracks (Track 1 contains your name, Track 2 contains your account number), Coin only uses Track 2. That means some credit card terminals cannot read it. (The company provides a list of major retailers that do not accept the card.)
Security is another touted benefit of the cards. All of them require you to verify your identity before you can add accounts to your device, and all have measures to lock the card if you lose it or it gets stolen.
Also in the works for Stratos, Plastc and Swyp is tokenization -- a process of converting your account number into a unique string of symbols (a token) every time you use the card. That one-time code is valid only for that particular transaction. "Tokenization is really the holy grail of payment security," says Olson.
Despite their purported advantages, universal cards face challenges.
Rollout issues have plagued many of the cards, Coin in particular. Coin originally began offering pre-order sales in November 2013 for an official release slated for summer 2014. That didn't happen, and Coin only began shipping the product in the summer of 2015.
Although Stratos has been shipping for several months, Olson says production can't keep up with demand. Stratos cards ordered this summer will likely not be delivered until October.Reviewers have been disappointed with card reliability, too, complaining the cards don't consistently work in the real world. You'll need to carry a backup payment card, which defeats the purpose.
Cost is another issue. A one-year membership to Stratos costs $95, while preorders for Coin run $100 and preorders of Plastc go for $155. Swyp is slated to retail at $99, although, according to the card's website, preorders of "Batch 1 SWYP" are available for a promotional price of $49. All of this for a card that does not pay you rewards.
Solving a problem that doesn't exist?
The convenience benefit of universal cards is also in question. Nick Holland, head of payments at Javelin Strategy & Research, says the notion of consolidating cards into one piece of plastic is hardly groundbreaking.
"The idea of aggregating cards into one card was first floated about 13 or 14 years ago," he says. "The questions are where do they fit, and what problem do they solve? As far as I can tell, it's none. It doesn't solve the problem of still having to carry a wallet."
Holland also notes that other forms of mobile payment, such as Apple Pay, in effect take card consolidation one logical step further. "They're trying to reinvent the card, but with the digitization of everything, your card is now virtual, such as Apple Pay," he says.
While Stratos' Olson acknowledges the potential of products such as Apple Pay, he argues that accessibility is still a major drawback. Apple Pay relies on near field communication (NFC) to transmit payment information. Many retailers have yet to install NFC readers. "By contrast, Stratos is accepted at 98 percent of locations," Olson says.
No EMV chips, yet
Still another issue is the ongoing transition to EMV credit cards, which contain smart chips that enhance security. MasterCard estimates that by the end of 2015, half of U.S. credit and debit cards will contain EMV chips.
The current batch of universal cards does not contain EMV chips. The cards still rely on less-secure magnetic stripes. Noting that the next generation of Stratos cards will contain EMV chips, Olson insists that Stratos' tokenization security can coexist with EMV: "It's really a step beyond EMV."
Still, Doug Johnson, senior vice president of payments and cyber security for the American Bankers Association, says the issue of convenience looms large. "At the end of the day, the question remains 'Do I need to carry my wallet?'" he says.
Holland is far more blunt. He says the universal card concept "falls so flat on a number of levels." "The novelty factor isn't enough," he says. "I can't see them selling enough of these to be economically viable."
Photos courtesy of Coin, Stratos, Swyp and Plastc.
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