Innovation Still Centers on Cards as Mobile Payments Languish

  • Philip Ryan
  • April 21, 2017
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Cards may be fumbling at the innovation game, but they’re still the center of the payments world, while mobile payments remain a geeky sideshow.

Another all-in-one card ran out of cash this week — the long-expected Plastc, announced back in 2014, didn’t ship a product, and closed its doors suddenly, leaving its backers and investors — it had netted $9 million over the years — adrift and irritated. “Plastc has exhausted all of its options to raise the money it needs to continue,” the company wrote on its homepage. Its social media channels also closed down this week.

Stratos Card, which launched (and shut down) in 2015, raised close to $7 million, but didn’t drag things out quite like Plastc. Stratos could also justify spending its money, since it actually shipped cards (rather good-looking ones) to backers. Coin, the granddaddy of the all-in-one cards, was rife was problems and also disappointed backers by shipping late and not working all that well, but ultimately pivoted successfully to IoT payments. Coin was acquired by Fitbit, and inked a significant deal with Mastercard.

Plastc, incidentally, at the time tried to cash in on Coin’s acquisition and pivot with the following snarky announcement :

Coin has been acquired and is now defunct. Or in other words, they sold you out. Don’t worry, Plastc’s got your back. We’re giving you the opportunity to trade-up your extinct card for $50 off a Plastc Card pre-order. Looks like you’re back in business!

Back in business, eh? Let’s hope no one took that offer too seriously. [After publication of this article, the page was deleted, but a screenshot is below.]

The prospect of all-in-one cards was never one that excited issuers, who lost their branding, or merchants, who were confronted with sleek cards not bearing the familiar payment network logos. Customers were attracted to the convenience, however, and the cards all found backers willing to give them $100 or more, for the ability to load their payment cards onto a single, configurable device — usually driven by a mobile app.

Don’t expect to see any new ones, though. Payments expert Nick Holland provided a succinct obituary for all-in-one cards as a species today: “Bloody stupid.” After some reflection, he added, “We already have an all-in-one card. It’s called a smartphone.”

But don’t tell the payments community, which remains determined to make cards continue to do more work. Witness Mastercard’s plan to include fingerprint scanners on its cards, first in South Africa, and across the globe by the end of 2017. “Our payment system operates through ideally the banks, mobile banking app,” Mastercard CEO Ajay Banga said back in September. “We believe in digital by default.”

But putting a fingerprint scanner on cards when they already exist on many smartphones seems like the worst vote of confidence for mobile payments imaginable. And more support is needed — the data shows mobile payments usage is “going the wrong way”:

The percentage of iOS users surveyed that had tried Apple Pay fell from 23.8% in June 2016, to 21.9% in March 2017. Furthermore, in March 2017, 48.6% of those users that had not tried Apple Pay said that they were happy with their current payment method (plastic card) compared to 37.0% in March 2015.

These data points seem to answer the riddle posed yesterday by fintech guru Bradley Leimer:

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Philip Ryan is Senior Editor of Bank Innovation and Senior Director of INV Fintech. He began covering financial services in 2012 and has more than 15 years' experience in online journalism. He can be reached at pryan@royalmedia.com.

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