Hamstrung by low consumer and merchant adoption, multi-account cards are still a product in search of a market. But Stratos Inc. believes Bluetooth technology is the tonic that will lure users.
In the coming months, the Ann Arbor, Mich.-based company plans a nationwide launch of a branded Stratos plastic card that will connect to an app in the consumer's mobile phone through Bluetooth low energy. The consumer will be able to download all of the plastic payment and loyalty cards in his wallet onto the Stratos card.
Stratos, which just received a $5.8 million funding boost from venture capital investors, "feels good about its position" because the Stratos card will not require changes in the current payments infrastructure in the U.S., said Thiago Olson, CEO and co-founder of Stratos. The cardholder will swipe the card through the point-of-sale terminal reader or put it into an ATM in the same manner as today's mag-stripe cards, Olson added.
Stratos will enter the market with a product concept that has already gained attention through companies like Coin and Dynamics Interactive. But the attention hasn't translated to significant consumer or merchant adoption as of yet.
Coin announced a similar multi-account reprogrammable payment card in the past year, but was facing shipping delays and some potential technology changes as product delivery pushed into next year.
Dynamics Interactive and NXT-ID's Wocket wallet seek a similar consumer experience. Dynamics features a button on the card that allows a consumer to switch between loyalty and payment cards, while the Wocket wallet is a stand-alone hardware device that can store multiple payment accounts.
Getting the product in front of consumers is only part of the problem for multi-account plastic cards, said Richard Oglesby, senior analyst at Double Diamond Payments Research.
"A lot of the challenge associated with this type of solution is monetization, generating an income stream," Oglesby said. "Consumers generally arent willing to pay for the card or monthly fees for using a wallet."
As such, a value proposition to support card issuers paying for this is lacking, Oglesby added.
"Because there is a mobile app involved, its possible that this could be monetized by interfacing the app to merchants, allowing merchants to try to influence consumer purchase and payment decisions through the app," Oglesby said.
Such a move would likely place Stratos in direct competition with Apple and Passbook, making it a value proposition that only works with scale, Oglesby added.
Because the Stratos card does not call for the merchant to make any changes at the point of sale, or for a consumer to change the habit of swiping a payment card through a reader, Olson feels his company will operate from a position of strength.
"We really don't view Apple, or Apple Pay, as a competitor," Olson said of Apple's new mobile wallet system. "The standard pitfall of a lot of the mobile wallets out there is that they are not backwards compatible with the infrastructure that is out there, whereas our new card certainly is."
Stratos views itself as right between the booming industries of mobile payments and connected, wearable devices such as smart watches, Olson said. "Apple has already validated the use of a connected device for payments with the Apple Watch, and we just happen to be in the card form factor."
The company will develop a chip-and-PIN feature for the card as the EMV migration takes hold in the U.S., Olson said. "The transition to EMV is an important issue, but we also have our sights set on something even more ambitious than that for top-tier security."
Stratos would be open to any discussions about partnerships with mobile wallet providers, but is currently focused on developing the multi-card solution, Olson said.
"The card form factor is a key for us," he added. "We are going to have cards with us for a while, and it is something we are all used to carrying around."