Coin Gets Lots of Buzz, But May Get Devalued When the Euphoria Wears off, Experts Say

The Coin card, which officially launched last Thursday but is not yet available in the market, is generating a tidal wave of buzz in the press and on social-media sites but is not wowing payments experts contacted by Digital Transactions News.

“It’s solving a problem that doesn’t really exist,” says Nick Holland, a senior analyst who follows emerging payments at Javelin Strategy & Research, Pleasanton, Calif.

One expert who asked not to be named points to similar technology already on the market and says Coin may be benefiting from its proximity to tech-heavy Silicon Valley. “These guys are well-wired from a social-media point of view,” says this observer.

Based in San Francisco, 18-month-old Coin is taking orders for a plastic card with a magnetic stripe that can hold credentials for up to eight payment or loyalty cards. Users select which card to use by pressing a button on the card. A display on the card shows the last four digits of the chosen card’s account number, its expiration date, and its card-verification value.

The card, which has the same dimensions as a standard credit card and sells for $100, comes with a mobile app and a card reader that links to a smart phone. Users load their cards into the app via the card reader while also using the phone’s camera to take pictures of the cards. The app loads the card data into the Coin card via Bluetooth low energy, a Bluetooth variant that can link devices without sapping battery power as quickly. When the card has been out of range of the phone for a period of time, its power shuts down and it becomes unusable.

The product’s main selling point, that it replaces stacks of cards people carry around in their wallet or purse, seems to have struck the right chord. Though the Coin card won’t be available until next summer, the startup apparently has been swamped with inquiries. “We have had an overwhelming response,” Coin says in one Twitter post. “We are responding to everyone as quickly as possible.”

How many of these contacts have resulted in orders is unknown, though as an enticement the company is offering the card for $50 to those who order now. Coin did not respond to requests for comment from Digital Transactions News.

Unlike companies like Square Inc., which provides a similar card reader and a mobile app for free, Coin does not share in the acquiring revenue stream and must recoup the costs of the Coin card, which could run to as much as three times the cost of conventional mag-stripe cards. Still, the card’s $100 price tag could dampen sales once the initial buzz wears off. “One hundred dollars is not happening,” says Holland “”I have to pay $100 for the privilege of replacing my cards, which were sent out to me for free?”

Others aren’t sold on the idea that thinning out a leather wallet is a compelling proposition. “I’m not sure I need to spend $100 to make my wallet a half inch thinner, and even this doesn’t let me leave my wallet at home,” notes the expert who asked not to be named. Cards without mag stripes can be entered into the app but not into the Coin card. As for ID cards, such as drivers’ licenses, Coin advises users to keep those handy at airports and other such venues where they are needed.

Another drawback is that Coin does not support EMV, the Europay-MasterCard-Visa chip card standard that the card networks are introducing in the United States as an eventual replacement for the mag stripe. In its Twitter feed, the company acknowledges the issue. “We don’t have a firm timeline for EMV support, but please continue to follow us on Twitter and we will keep you posted,” says a company post.

Nor is Coin the first product in the market to offer a multifunction mag-stripe card. Dynamics Inc., a Pittsburgh technology startup, introduced a card three years ago that lets users press a button to rewrite the mag stripe to support a credit, debit, or loyalty card. The company’s technology, called ePlate, has attracted marketers looking for more efficient ways to push loyalty programs to consumers. Contacted by Digital Transactions News, a Dynamics executive said the company, which holds 68 patents, has no comment on Coin.

Meanwhile, the buzz around Coin, which has attracted initial funding from K9 Ventures, Sherpa Ventures, and angel investors, continues to grow. By Tuesday afternoon, it had attracted more than 14,000 Twitter followers.