High-tech credit cards have often been a tough sell because of their cost and complexity, but two companies are pushing two very different approaches that they hope hold enough appeal to consumers to outweigh the up to $100 fee for the cardholder.
Coin, a relatively new entrant, allows consumers to link multiple payment accounts to a single rewritable card. Dynamics, which has offered its own rewritable card first through Citigroup and later through UMB, ties the card to a single payment account but dozens of user-selected rewards.
The ePlate card from Dynamics and UMB has been steadily adding rewards providers since its 2012 launch. "We have more than 50 brands now, and we started with eight," says Jeff Mullen, founder and CEO of Dynamics (UMB referred questions on ePlate to Dynamics).
The idea of embedding technology that allows consumers to change payment cards on the fly has existed for some time without robust adoption, but the successful crowdfunding of Coin and the steady growth of Dynamics' ePlate brand network suggests traction for the model.
To use ePlate, consumers visit a website to select different loyalty programs or rewards. When making a payment, the consumer pushes one of two buttons on the card to call up one of the chosen rewards. "We have 52 partners, so it's like having 52 cards in one," Mullen says. Dynamics would not disclose the number of consumers who have used ePlate, but Mullen says the product is adding about one new merchant brand partner per week.
When UMB first issued ePlate, cobranded cards that use buttons to trigger different relationships had languished for some time. Dynamics' earlier product with Citi, which allowed users to choose to pay from a credit card account or a rewards balance by pressing the card's built-in button, never left pilot.
Mullen did not comment specifically on the Citi card, but said the current appetite for cards with embedded technology is growing as consumers wish to receive benefits more quickly given the increase in mobile and online shopping. EPlate also focuses on providing rewards that can be redeemed right away, such as movie tickets and song downloads, as well as on experiences such as concerts or a driving lesson from the racing company Skip Barber.
"With a traditional card you don't get the points until the end of the month. In February you are told how you did in January," Mullen says. "We calculate the value and give it to you instantly."
Dynamics, which recently deployed a game-based card system at KeyBank, has also developed EMV-chip and contactless versions of ePlate.
Coin did not provide an executive for an interview by deadline. Coin is presently designed to work with the current payment infrastructure, though EMV is on its roadmap, CEO Kanishk Parashar told PaymentsSource in an emailed statement.
To use Coin, consumers load their card accounts by swiping their individual magstripe cards through a reader that attaches to a smartphone. They then use the button on Coin to choose a card before making a purchase.
"Interactive cards is a neat space," says Brian Riley, a senior research director at CEB TowerGroup, who says Dynamics' model enables consumers to track their rewards and adds flexibility. The cards are also durable, he says. "I picked up a Dynamics card the other day that had been lying around for a couple of years, and it still worked."
However, the wow factor comes at a cost, and both companies have a price barrier.
"Coin wants $100. Not for a fee, but just to support the card," Riley says. "The rewards are the thing."
Dynamics and UMB offer two versions of the ePlate card. One version costs $99 a year and the otherintroduced in Juneis free, but the free version requires more spending to earn the same rewards. For example, the Skip Barber driving experience requires twice as much spending on the free version of ePlate.
There are other challenges to the model, such as their introduction coming at a time when U.S. issuers are already scrambling to accommodate the migration to EMV-chip cards.
"There is so much going on with plastic design right now," Riley says. "EMV is a pretty big step, and you start to worry about what these cards will look like. There's going to be a lot of chips in the card."
That also means extra expense, which pressures the interactive cards to deliver a higher value through the offers and rewards, Riley says.
Coin's slogan, "Swipes like a dream," is also a concern, as it pins the technology to mag-stripe payments, says Gareth Lodge, a senior analyst at Celent. "Liability shift, the driver for EMV, happens in 18 months. In effect, this is a solution that tinkers with 1970s technology."