One Card to Store Them All?

A silicon valley startup wants to control your wallet- is it the future of payments?

Earlier today, some people behind a website called onlycoin.com let their site go live, and made $50,000 in 40 minutes.

Their product is Coin, an electronic credit card that uses a Square-like scanner to digitally store up to 8 cards- credit, debit, gift or reward- on one, black, .84mm thin card. Press a button (on your credit card), and an electronic display (on your credit card) changes from “Personal” to “Company,” so that you can comp your overpriced business lunch. The waitress swipes it just like any other card, and you get to be the center of attention at the table when everyone leans in to check out your credit card straight out of I Am Robot.

For $55 right now, you can go on to the site and pre-order your card- that won’t ship until Summer 2014.

Born out of Y-Combinator, this certainly will get traction, if only judging by the buzz it has generated in the past 8 hours. But this team, led by Kanishk Parashar, has a vision for the payments space.

They’ve built in some nifty features like an auto-disable via Bluetooth LTE if your card and your phone get too far away from each other, and 256-bit encryption and password protection for the security-conscious.

But there’s more questions here, especially with respect to security. What’s stopping people from using this for fraud? For example, how difficult would it be for me to take your credit card, swipe it into my phone (somehow bypassing the authentication process), and go to the town on the nearest Expensive Things Depot?

On the website it says “ you cannot lock your Coin, but you don’t have to. Coin will automatically deactivate if it loses contact with your phone for a period of time that you configure in the Coin mobile app.” But how long before it deactivates? I really can’t press a button on my smartphone to lock/unlock an electronic credit card?

What happens when the waitress accidentally (or not accidentally) presses the button to charge my meal to my personal card instead of my business card? A fingerprint-authentication process would be ideal here.

Also, some people over at Y-Combinator’s forums have noted that the nature of Coin could hurt merchants in fraud situations, due to the intricate and confusing rules that detail the lengths merchants are supposed to go to in order to process a credit card- including taking physical imprints.

Obviously, you can’t take a physical imprint of this product, so the merchant is more liable in chargeback fraud cases when failing to verify identity on an anonymized black card without a name, and/or take an imprint of a card’s 16-digit number.

There’s a lot of questions about Coin, and there will be a lot of challenges they have to overcome to make to success.

But somehow, I found myself pulling out my credit card to pre-order Coin for $55 literally within seconds of seeing the headline of an article about it.