How Dynamics' new internet card builds on lessons of the past
Dynamics Inc. has been committed to bringing high-tech multi-account cards to market for years, but it's tough to sell banks on pricier plastic in the age of mobile wallets and e-commerce.
In unveiling its new Wallet Card this week, the Pittsburgh-based manufacturer's intelligent card division says it has learned from the recent developments in digital payments. Dynamics went so far as to call its product the first "Internet of Things card" — and true to its name, the card has a direct line to the internet.
Like the company's earlier cards, the new product can rewrite its magstripe to draw funds from more than one account, such as a checking account and a rewards balance. The new product supports EMV and NFC, and it uses a digital connection from Sprint, enabling a lot more.
"Today, a consumer can be watching TV and hear news about a retail or other breach, and then they start looking for their cards to see who to call or what to do," said Dynamics CEO Jeff Mullen. "With the wallet card, they would get a message right on the display of the card that the bank is aware of the breach and has already issued new card codes to your digital card."
That sort of technology can go a long way to help Dynamics break down a wall that has been difficult in the past — convincing U.S. banks and issuers to take a serious look at Dynamics' wallet card, said Thad Peterson, senior analyst with Boston-based Aite Group.
"I was very skeptical when I went in, but this is a physical manifestation of the digital wallet and I was pretty impressed," said Peterson, who attended Dynamics' presentation at the Consumer Electronics Show in Las Vegas. "The fact that it changes with a push of the button, it is pretty impressive because when it changes the account number, it changes the mag stripe, the EMV chip and the NFC as well."
Dynamics' earlier card also made a strong first impression, but hit some turbulence on its way to market. The vendor won "Best in Show" at multiple Finovate events and signed Citigroup as an early issuing partner, but its Citi card languished in pilot. Dynamics had a more successful deal with UMB Bank, which brought a Dynamics card to market even as Citi dialed back its own commitment.
The new Wallet Card operates on the Visa network, and Dynamics has lined up the Induslnd Bank in Mumbai, India, as well as Sumitomo Mitsui Banking Corp. in Japan as issuers that plan to provide the new cards to customers this year.
Mark Nelsen, senior vice president of risk products at Visa, indicated that the company will offer a Visa Wallet Card this year as well.
"We are excited to welcome the Dynamics wallet card into the Visa family," Nelsen said at the CES technology show, taking place this week in Las Vegas. "It is packed with new technology that creates new experiences, better security, better rewards, and a host of other things."
The product is important for Visa because the company has "been doing card evolution for 50 years now, and this starts to bring new life into card products," Nelsen added. It also allows Visa to move forward with significant growth in the mobile arena as well as keeping a plastic card relevant well into the future, he added.
Some cards will feature three payment buttons for credit, rewards and installment payments. Other electronics within the card allows the user to change colors or logos, depending on the payment button picked. The card itself does not display a credit card or debit card number; rather the card numbers always show on the card's digital display.
"We are wanting to change the payments world without changing how it works," Mullen said. "This is a complete digital card, a true mobile device that doesn't require the consumer to do anything from a [battery] charging perspective."
Dynamics isn't alone in trying to reimagine the plastic card. Gemalto has developed a card with a built-in fingerprint reader as a security play, for example.
Dynamics is heading in a different direction with the wallet card, noting that any type of fraud exposure or instances of the card being lost or stolen is remedied almost immediately through the digital reissuing of a card number.
In addition, when a cardholder is not using the card, it can be turned off to render it useless if it is lost or stolen. The cardholder would "restart" the card through a PIN that can be as small as one or two letters or numbers. If it is in the wrong hands, after a certain number of unsuccessful attempts on the PIN, the card will turn off and stay that way until the actual cardholder inputs a restore code.
The cards will allow downloading of other cards within the same brand or issuer, but it can include, for example, a Visa credit card processed through TSYS and a prepaid card processed through First Data, Mullen said. Dynamics estimates each download takes between 10 and 20 seconds and, by the official launch, that time could be cut in half by Sprint.
But a high-tech card, no matter how impressive, is still a tough sell for banks that are slow to replace tried-and-true technology.
"There is no overnight success story in payments, because it takes years to sell the large issuers into it," Mullen said. "On average, it takes 40 years for a payments technology to run its course and for changes to come into the market, but the good news is that once you have established a technology, no one turns off the core process of payments."
Ultimately, Dynamics has to establish "a critical mass of banks," Mullen added. "When that occurs in this industry, the other banks will take notice and then more people adopt the technology."
Unlike other so-called wallet cards like Coin and Plastc, which marketed directly to consumers, Dynamics is wise to talk directly to banks, Aite's Peterson said.
"A smart thing Dynamics is doing here is selling to issuers and not trying to sell it as a concept to consumers," Peterson said. "Mullen's patience on this is also impressive, as he understands it will take time to do anything that changes technology. And he has the funding rails to do it."