The concept of a high-tech multipurse card with a built-in display may seem out of place in a world where many of the same functions can be handled by mobile wallet apps, but some entrepreneurs remain committed to the idea of a futuristic plastic card.
Investors over the last two years have poured millions into a crop of multi-function payment cards promising more features and greater security, and despite consistently disappointing results, the money keeps flowing. The list of contenders aiming to capture interest in physical cards that promise greater functionality and security with manually controlled cards is surprisingly long, including
None has achieved a breakthrough yet, and one of the most promising — Stratos — had to be rescued from the brink of doom after appearing to go dark this month.
Ciright One LLC, a rival company marketing a similar product, provided a lifeline to keep Stratos alive, the companies said Tuesday. Philadelphia-based Ciright will take over management of Ann Arbor, Mich.-based Stratos’ existing cards, restoring customer support, said Thiago Olson, Stratos’ CEO and co-founder.
Ciright markets the “One” card, a slim, battery-powered smart card that stores credit, debit and membership cards, supported by a mobile app. The card has a $99 a year fee and is scheduled to ship to consumers in 2016.
Attributing the recent setback to “challenges with ongoing company financing,” Stratos is undergoing a restructuring, but its cards will continue to function as they have since the product launched earlier this year, Olson said.
Stratos functions like a magnetic-stripe card but enables users to store any number of credit, debit or gift cards. Users can designate a trio of cards for immediate use, selecting them by pressing one of three buttons on the right-hand side of the card.
The vendor promised that banks issuing the card would have access to data on card usage and consumer behavior, enabling Stratos to deliver in-store mobile promotions and marketing for retailers based on consumers’ location and shopping history. Boston-based
Stratos seems to answer a need some see in the increasingly digital payments space for a card that provides both the familiarity of a magstripe card and the security of a mobile wallet. But its concept is similar to many others, and consumers may already be frustrated by some of the early issues that rivals such as
“The challenge with products like Stratos is that they have a hard time providing the functionality needed to differentiate themselves from other [digital] offerings out there,” said Thad Peterson, a senior analyst with Aite Group.
The foremost problem is that these high-tech magstripe cards emerged at the same time the U.S. began its transition to EMV-chip cards, forcing these companies to adapt to current and future updates to EMV security, he said.
“At best, it’s likely that only one of a customer’s [EMV] cards could be supported in a multi-function card, which means a lot of a typical customer’s cards wouldn’t work in the device,” Peterson speculated. “In addition, mobile wallets like Apple Pay and Samsung Pay can perform essentially the same functions, but they can easily handle a number of different EMV-enabled cards…at no incremental cost to the consumer.”
Consumers can buy a Stratos card for a $95 membership fee, which includes a replacement card, shipping and other costs. For $145, users get a two-year membership for the “connected” card, which stores multiple cards that can be managed via a Bluetooth connection from a mobile app. Stratos promised that its cards would include the “latest technology,” including planned support for EMV.
Olsen declined to provide specifics on the latest plans for Stratos, and executives from Ciright were unavailable for comment.
