Say you want to introduce a credit card in a weird shape — something eye-catching, maybe with a hole to stick it on a keychain.
After all, Discover Financial Services is running national television ads for its amoeba-shaped Discover 2GO card, and on Wednesday, Bank of America Corp. introduced its Visa mini card, a wee version of a standard bank card.
First, figure on spending about 60% to 600% more per card than you would on a standard magnetic stripe credit card, which costs 25 cents to produce.
Next, factor in the costs of card design support ($5,000 to $200,000 or more), customized manufacturing equipment ($5,000 to $250,000 or more), custom dies ($25,000 or more), and legal fees (incalculable).
Consider that consumers may react to the product with about as much enthusiasm as they have for smart cards, now considered a bargain at $3 each to manufacture. Also weigh the fact that you may be introducing a product that does not fit neatly into people’s wallets — and whether that is a boon to them.
“It could be a fad, like the pet rock, but the idea is to grab market share,” said David Abell, the director of equipment and systems engineering at Oberthur Card Systems of America, the manufacturer that supplied the cost estimates. “Based on others who are asking us, they are concerned about it.”
Coming up with an oddly shaped or sized credit card can be a production “nightmare,” Mr. Abell said, but the challenge excites his staff, which was getting a little bored making the same type of cards all the time. “If you are an engineer, you like new and exciting products.”
A marketing brochure from the North American division of Oberthur, which is a subsidiary of France’s Oberthur Card Systems, says: “There are six full-time engineers on staff who routinely work to make the ‘impossible,’ possible.” The brochure, discussing the costs and procedures involved in issuing an oddball card, was printed in response to interest from banks.
Oberthur manufactures the Discover 2GO card, which was introduced in March and comes in its own curvaceous plastic case, and Mr. Abell said his company is talking to other issuers about their newfangled ideas.
A Discover executive said that so many cardholders demanded the 2GO card that, at first, production could not keep up with demand. This is obviously a good sign, but the same was also true of American Express Co.’s Blue card, the first U.S. smart card, which later tapered in popularity.
“We obviously checked several other options,” said Ashoke Dutt, the executive vice president for marketing and business development at Discover, a division of Morgan Stanley. “We said this will give us more mileage at this point than a chip card, because it is tough to use a chip card.”
Mr. Dutt defended the extra expense built in to the 2GO card, whose plastic carryall shields the cardholder’s account number, a fact the company touts.
“We did research with customers, and they said, ‘We don’t like our card number to be on view,’ ” he said. “That is the key reason why we designed it the way we did, rather than like loyalty cards that just hang there. There are no security issues. They don’t need protection.”
Bank of America’s miniature card, which so far is being offered only to some the bank’s card customers — and only as a companion to a regular-sized card — has the look and feel of the loyalty keychain tags that so many supermarkets and drugstores are issuing.
In Bank of America’s case, any increased production costs may one day be offset by revenue from royalties paid by other issuers that want to copy the product.
Visa U.S.A. has given the Charlotte company a one-year lock on the U.S. market for the miniature card; after that, other Visa members may come out with their own, as long as they pay Bank of America a per-card fee on the patented product, which measures 1.5 by 2.5 inches.
Jamily Pentz, the Visa mini card product manager at Bank of America, said the card was designed with an eye towards keeping production costs down and toward earning income down the road. Adding a microprocessor chip would not be out of the question, she said.
“There will definitely be further development to the mini card as new technologies come along,” Ms. Pentz said. “It could be possible.”
Al Banisch, the senior vice president of consumer credit products at Visa U.S.A., brushed off the suggestion that the keychain cards — which bear account numbers — could pose any security problems. “New ideas sometimes break the rules.”
Bank of America has said it plans to issue a million of the miniature cards within a year. Mr. Banisch said he anticipated issuing “millions of these cards.” Discover won’t say how many 2GO cards it has issued.
“With the sea of credit cards available out there, everyone is in a quest to stand out from the crowd,” said Doug Eden, the director of marketing at Perfect Plastic Printing Corp., a St. Charles, Ill., company that manufactures around 300 million plastic cards a year. “One needs to build a business case to show that they will get more dollars spent on credit card accounts to justify it.”
Because of its plastic case and the box used to ship it to customers, Discover 2GO probably cost far more than the Visa mini card, Mr. Eden said. The Bank of America card probably weighed in at the low end of specialty card prices, because it could be cut from a larger piece of rectangular plastic and slipped into the same envelope that delivers the traditional card, he said. It also uses a standard Visa hologram, while Discover created a special one for 2GO.
Industry observers called the whole idea of issuing oddly shaped cards a chancy proposition.
“The jury is out on whether these are devices that will be very successful, but there is no downside for the issuer,” said David Robertson, the president of The Nilson Report of Oxnard, Calif. “People who are attracted to this kind of thing will generate additional transactions, they want the fun of using an unusual product.”
Robert McKinley, the president of Ram Research Group Ltd., said that Discover has had so much success with 2GO that it is stepping up an already-heavy advertising budget.
“Consumers may associate a different-shaped card with new technology,” he said. “Chip hasn’t gotten consumers excited.”
Issuers may see the new cards as another way to differentiate themselves, Mr. McKinley said. “The big thing is the branding. They want to get away from Visa and MasterCard. They want to be exclusive. Discover has exclusivity on this shape, and I think that is what others are looking to.”
