Dynamics Wallet Card nears launch with U.S. pushed to the periphery

Dynamics has been in the high-tech payment card game long enough to see its market disrupted by two major shifts: the U.S. EMV migration and the launch of Apple Pay. Going forward, the company may find that the best way to deal with a fickle U.S. audience is to focus its attention elsewhere.

When Dynamics' next card launches, it will once again test whether banks and consumers — wowed by the concept of storing all of their accounts in a single card with a built-in display — will actually change their habits and choose Dynamics' product over the growing range of alternatives that include mobile apps, fingerprint readers and fashion accessories. Its partners for the new product include Emirates NBD, Sumitomo Mitsui Card Corporation (SMCC), CIBC, and Indusind Bank.

These deals signal a shift in the Pittsburgh-based company's strategy. In 2010, Dynamics made a splash by signing New York-based Citigroup to test its high-tech card, but the product languished in pilot for two years without ever coming to market. Today, Dynamics has changed not only its technology but the audience it targets.

The U.S. market is a fast follower when it comes to payment card technology, said Brian Schuliger, senior vice president of business development for Dynamics. He points to EMV and contactless cards as examples where the rest of world has taken the lead and the U.S. has followed.

“In contrast, issuers outside of the U.S. are interested and engaged in the Wallet Card technology,” Schuliger said.

Dynamics Inc. announced the upcoming Wallet Card at the Consumer Electronics Show in January and plans to bring the product to market in the fourth quarter of this year in the United Arab Emirates. Visa, Mastercard and JCB also participated in its January announcement.

Unlike other competitive multi-account programmable cards such as Coin, Swyp, Stratos, and Plastc — all of which promised a similar experience as the dynamics card, and all of which shut down — Dynamics does not plan to sell its product directly to consumers.

While the U.S. is soon approaching the three-year anniversary of the major card networks' EMV liability shift, according to the latest (March 2018) statistics from Visa, only 63% of U.S. storefronts accept EMV cards. And the deadline for gas stations to install EMV at the pump has slipped to 2020.

While the U.S. market may be a fast follower in payment card technologies, there are other factors at play.

“The technology is impressive but that’s only half the battle,” said Kevin Morrison, a senior analyst with Aite Group’s retail banking and payments team. “You have to teach the consumer a new process on how to pay for something and that’s not easy. We learned that with Apple Pay. The low take rates show that consumers are reluctant to change their habits.”

Dynamics card's over-the-air provisioning is a unique feature that immediately addresses the need for card reissuance in the case of the latest data breach and can improve a card issuer’s ROI when it comes to fighting fraud. In this way, Dynamics may be ahead of the game, but it's addressing a pain point that is rapidly shrinking.

“Reissuance is different than what it was years ago," Morrison said. "Coupled with card controls available on a number of mobile banking apps, consumer can put their cards on hold temporarily.”

Even without mobile wallets replacing plastic cards, trends in branch technology have reduced the need to await a reissued card in the mail. In urban markets where branches are plentiful, consumers can get a replacement card issued on the spot, noted Jason Bohrer, senior vice president and general manager with CPI Card Group, a manufacturer of payment cards and instant issuance solutions that does not work with Dynamics.

The Dynamics card fits into trends such as designing cards with metal cores or other flourishes that make them stand out in the wallet or when placed on a counter for payment, Bohrer said. Since the Dynamics card is sold to issuers and not consumers, the bank brand will always be present — and the high-tech features could help justify a high annual fee in consumers' minds, he said.

However, Schuliger states that the Dynamics card is not being positioned as an affluent card.

“It’s a mass market card," he said. "The successful experience we’ve had with CIBC Tim Hortons' reward card [an earlier version] showed us the appeal is for a mass market audience.”

Another key challenge facing the Dynamics wallet card is over-the-air provisioning to mobile wallets which Morrison points out is currently in trials at several major issuers.

“These issuers want to be able to push a card to your mobile wallet so you can use it immediately at POS with NFC or in m-commerce with the back-up plastic card mailed to you," Morrison said.