A lot of change in the payments business is unavoidable, such as EMV-chip cards and mobile commerce, so the high-tech card maker Stratos plans to replace its cards each year as part of a membership program.
The company charges a $95 yearly membership fee, which includes a replacement card, shipping and other costs. There's also a $145 two-year membership option for its 'connected' card, which stores multiple card accounts and can be managed via Bluetooth connection from a mobile app.
"We realize that there is so much changing in the payments industry right now and we don't want to launch with a card that's solely reliant on mag stripe," said Thiago Olson, co-founder and CEO of Stratos Card. "For $95 you get a new card each year with all of the latest technology."
The membership model is also a marketing pitchStratos says the actual connected card is free, though the $95 yearly membership is in the ballpark with most connected cards cost. Rival connected cards from Coin and Swyp cost about $99 (Swyp charges $49 for pre-orders).
The cards will likely have to be replaced almost yearly given the almost constant introduction of emerging technology such as EMV-chip security, Olson said.
Stratos plans to add EMV in the next generation of its smartcard, which means an EMV version of its product should be available in less than two years.
"Without EMV, the product life is going to be pretty short," said Thad Peterson, a senior analyst at Aite Group.
Stratos is also working on biometrics and tokenization, which would bring its product's security in line with mobile wallets such as Apple Pay and Samsung Pay.
The first-generation Stratos card, which was publically released this month, stores any mag stripe card including library cards, or door-key access cards, and of course payment cards. The product also tracks transactions to identify the cards that most commonly used for certain purchases. "You can see where and how you used a certain card, and track all of that in one spot," Olson said.
Stratos uses a Bluetooth connection to a smartphone to allow consumers to manage their use of the product.
The business model behind some connected cards may be misguided, according to Tim Sloane, director of the debit and prepaid advisory services at Mercator Advisory Group.
Most cardholders prefer to keep three to five cards on hand, Sloane said, adding consumers look for the color and image associated with the card they want to use, often pausing as they make that decision.
"While it may appear convenient to have all of those cards preloaded into a single card, doing do will require the cardholder to learn a new process and there will be far fewer visual clues to help with the decision," Sloane said. "It also means the cardholder has one point of failure. Forget to pick that one card up and there are no cards left as a safety net."