Editor's note: An earlier version of this story stated that Keith White of mobile payments company Trak did not respond to repeated requests for comment sent via Kickstarter. American Banker sent White only one message.
Rather than pitch his new digital wallet only to banks, iCache Inc. founder Jon Ramaci is offering his product, the Geode, on the crowd-funding website Kickstarter.com, a site not typically associated with banking technology.
With most products, the consumer is involved only at the end of development. The specifics are negotiated among banks, card networks, technology vendors and, in the case of mobile wallets, carriers. The end product is usually tested first with employees before most consumers even hear of it.
Kickstarter was designed in 2008 to turn the tables, giving consumers control over which technologies make it to market. The popular crowd-funding site allows inventors and artists to set a budget for each project. If enough consumers contribute funds, the idea gets funded. If too few are willing to pitch in, the idea instead starves to death.
The Geode, a secure digital wallet that features a rewritable magnetic-stripe card, joins numerous other inventions that do not enjoy the same level of publicity and backing as the digital wallets developed by Google Inc. or the mobile carrier venture Isis.
Typing a banking term like "payment" or "wallet" into Kickstarter's search page brings up products like Geode, as well as the smartphone card reader Trak, a payment-enabled bracelet called RumbaTime and a secure browser called SurfEasy. The inventors that use Kickstarter have a platform for their ideas without having to share the spotlight with bank technology giants.
"We are doing it a bit for the funding part, but we are also able to gauge consumer interest and get some really good questions and feedback," says Ramaci.
For example, the Geode's rewritable card does not have any personal information printed on it — a design choice that might lead some people to think it is a counterfeit card. A Kickstarter user suggested putting a screen on the card that displays the information of the linked payment account, and Ramaci agreed to look into implementing that idea.
ICache, of Cambridge, Mass., set a goal of raising $50,000 by April 21 through Kickstarter (Ramaci is raising further funds through traditional investors). At different levels of funding, investors are promised different rewards, much like how PBS viewers receive tote bags and magazine subscriptions for donating certain amounts.
A common practice on Kickstarter is to give consumers the product they are funding if they pledge a certain amount. Over 700 of the 933 current Geode backers have pre-purchased a Geode this way, raising nearly $200,000 for the project by Tuesday morning.
Not every banking gadget on Kickstarter has met with such success.
White promised a Trak reader to everyone who pledged $25. Ramaci's Geode is in many ways a tougher sell — Ramaci asks investors to pay $159 for the device, which he plans to sell for $199 when it is in full production.
Besides its price, the Geode may put off consumers for its complexity. The Geode is a sleeve that covers the entire back of a user's iPhone, adding a fingerprint reader, e-ink display and magnetic-stripe card writer.
To make a payment with Geode, consumers must pre-load a payment account, then unlock the account with a fingerprint swipe. The Geode then writes the account data to an included magnetic-stripe card. The device's e-ink screen can display bar codes linked to a rewards account.
Compared to Google Wallet, which relies on technology that comes built-in with certain phones, Geode's approach may be deemed too expensive, bulky and confusing for consumers to embrace. But Kickstarter has proven that for at least 700 people, the Geode makes perfect sense.
"Kickstarter can be an interesting way to test how your idea might be accepted by the broader public," says Celent senior analyst Zilvinas Bareisis. "Much more importantly, Kickstarter can help [established] entrepreneurs raise money and obtain funding for the project."
The social aspect can allow the developer to clarify the product's pitch before bringing the product to market. The Geode's product page has nearly 100 comments, and many of them are from Ramaci answering questions and accepting feedback on how the Geode works.
With a site like Kickstarter, "you have the wisdom of the crowd," which can make or break any banking technology, says Nicole Sturgill, a research director in the retail banking and cards practice at Towergroup.
One of Kickstarter's most famous success stories is a wristband that can turn Apple Inc.'s iPod Nano into a wristwatch. The product, called TikTok, raised nearly $1 million in late 2010, though its funding goal was a mere $15,000.
Kickstarter has already proven the business case for Geode, Ramaci says. Five backers have agreed to become re-sellers, and the digital wallet will go into mass market production in early May, he says.