“Cowries, Cash & Credit – The History and Future of Payment Processing” Series 4 of 4

The History (and Future) of Payment Processing – Part 4

In part 3 of our “Cowries, Cash & Credit – The History and Future of Payment Processing” series, we took a look at the advancements of payment processing with Apple Pay and Google Wallet.  However, times and technology are ever-changing and there are more products coming to market that promise to be easier, more convenient and safer for both merchants and consumers.  In the last and final part of our series, we will introduce CurrentC, Stratos and Coin and try to explain how all of it works with EMV. 

CurrentC

Both Apple Pay and Google Wallet are promising services, but some retailers nationwide have begun deactivating their payment terminals and encourage the use of their competitive payment system – CurrentC.  As a result, the collateral damage competition between mobile giants could prove frustrating for customers.

Conspicuously absent from Apple’s partner launch lineup a couple years ago were massive retail juggernauts like Walmart and Sears. That’s because these businesses collaborated on a mobile payments solution of their own, available in both platforms’ app stores, called CurrentC. CurrentC uses QR (Quick Response) codes on cashiers’ screen to initiate a transaction with the smartphone, circumventing the iPhone’s locked-down NFC chip. CurrentC requires a linked bank account, and asks for users’ Social Security and driver’s license numbers before adding a payment method. The system allows for the application of discounts or promotional pricing all within the app, and was designed to let retailers avoid margin-cutting credit card fees.

CurrentC is not available yet, and at this time requires an invitation to begin using, but could see an opportunity among smartphone users whose devices don’t include NFC capabilities—namely, older Android phones and iPhones before 6.

Some smartphone users have announced their intention to boycott affected stores, but the real impact of the Apple Pay–CurrentC melee is longer-term. Soon, the decision to shop at one retailer over another might come down to more than location, and might be determined by the smartphone in users’ pockets.

Another option – Stratos, Coin, Plastc

If you want to forgo the worries of the Apple Pay-CurrentCdebacle, you can look at universal credit cards.  We have reviewed some in our previous blogs, but the Stratos card appears to be worth a longer look. 

The founders of Stratos decided in 2012 to raise over$7 million from venture capitalists rather than pursuing crowdfunding cash. And for good reason. This let the company quietly build and develop the technology, brand and marketing. As of today the company and product is relatively unknown and thus doesn’t have the immense public pressure that often plagues crowdfunding gadgets — like one of Stratos’ closest competitor, Coin. 

 

The Stratos card ships with a mag-strip reader that snaps into a smartphone’s 3.5mm port. Load the app and swipe your cards to add them to the system. The card’s key information is not transmitted to Stratos’ servers. The only data the company gets is the contact information associated with the card, which they use to fulfill a legal requirement to verify the owner.

Once they scan their cards, owners select three to be accessed directly on the Stratos. When it’s time to select one of their cards from the Stratos, users tap it and press one of the three buttons, which correspond to one of their cards. The Stratos Card can then be swiped like a normal credit card. There are two magnetic strips on the back of the Stratos, which is technology that the company developed to enable the card to work in every type of card reader.

Along with using bank-level encryption, the Stratos Card has proximity alerts built in. Owners can set the card to be disabled if it’s been separated for a set amount of time from the proximity of the owner’s phone.

Stratos is not alone in attempting to build a universal credit card. Below is a side-by-side-by-side comparison of Stratos to Coin and Plastc, a company that promises its card will support Visa, MasterCard and American Express accounts.  Though mobile carriers and phone makers are rolling out usable and (some) successful mobile wallets, it doesn’t hurt to take a look at what is happening in the world of universal credit cards.

Card	Stratos	Coin	Plastc
Info displayed on card	None	Last 4 digits of the card, card network and expiration date	16-digit card number, expiration date, issuing bank, card network and your name
Card interaction	Single tap on any card surface and press one of three preset buttons on the card before swiping	Enter unique tapping sequence (must be enabled) and press button to cycle to desired card before swiping	Enter PIN, pick card category and then select card before swiping
# of accounts supported on the card	3	8	20
EMV	No (future upgrade)	No (future upgrade)	Yes
NFC	No (future upgrade)	No	Yes
Battery life	2 years (non-rechargeable)	2 years (non-rechargeable)	30 days (re-chargeable)
Pricing	$95 every year or $149 every 2 years	$100 per card	$155 per card
When is it available	April 2015	November 2014	Summer 2015

But, how safe are these types of cards?

These cards are extremely new and there are still a lot of kinks to be worked out. Aside from the limited battery life of these cards, you cannot control the Bluetooth capabilities. The company controls all of this, so you cannot turn it off and on yourself. The lock feature that Stratos and Coin both are offering seems like a nice feature to have if you accidentally leave your card behind at a register or restaurant, but it's not clear as to how effective this lock is, nor has either company explained how easy it is to unlock your card once it's retrieved.

Another concern with these cards is the payment method themselves.  This October merchants are required to change their payment systems from magnetic stripe technology to the more secure EMV payment systems. When this transition is made, will the all-in-one payment cards stay behind the times by continuing to use magnetic strips? If they do update to chip-enabled cards, will the company have more glitches to sort out, and will users be required to pay an extra fee to upgrade? The answers for these questions are currently unknown, but these are questions that you should ask yourself and the card company before you sign onto one of these cards.

With so many new electronic and mobile payment options out there now, it's important to do your own thorough research before trusting any of these companies with your financial information. Even trusted companies have been hacked recently, exposing millions of people's personal information, so you can’t just assume your information will be safe with Stratos or Coin. And, in the event any of these companies are breached, it’s not just your name that will be exposed — it’s every item that you provide to these services. So, it could be the equivalent of handing your entire wallet over to a hacker or identity thief. Before you decide to sign up for one of these cards, that’s something you should decide if you want to risk.

If you have questions about the services Chosen Payments provides or you have a topic you would like to see covered in my blog, feel free to reach out!  

Zach Allen Regional Vice President at Chosen Payments
Credit Card Processing | ACH | Gift/ Loyalty Cards | Mobile & Ecommerce Payments | ATM
Toll Free: 1.855.424.6736 x. 116
zach.allen@chosenpayments.com  |  www.ChosenPayments.com 
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