I am an European, so maybe it's different in US, but is too many cards problem that people actually have? Judging by the top 2 stories on HN right now, it probably is.
I have a card. It is hooked up to my bank account. It works.
The reason is U.S. banks have been getting creative with reward programs lately. They entice you with "5% back on gas" or "100,000 points" which all seems very grand. So naturally us nerds want to hack the system for maximum profit.
The reality though is that these programs are not sustainable if fully exploited. Interchange (the fee U.S. merchants pay when you run a card) is under 2%.* A bank can't reward you more than that without losing money. Well, they can make up for it on the interest they charge on debt, but presumably if you're optimizing cards then you're optimizing where you hold your debt too. The way banks make these programs viable is with marketing, tricks, rules, time limits, etc. that make you think you're doing better than you really are.
Smart consumers figure it out. But not everyone bothers to, and so there's enough "dumb" ones to make it possible. Kind of like how gym memberships work.
Long story short: If a service like Wallaby takes off and levels the playing field, then these programs will disappear. So if you're one of those "smart" consumers that enjoys exploiting cards to make an extra buck or two, then you're better off not rocking the boat.
*Europe's interchange is a fraction of that, which is why you don't see this rewards phenomenon there.
I have a decent number of credit cards, but most of them are cards that I opened and just used to hit the minimum spend, claim my signup bonus, and then go back to using my regular credit card that has the best day to day rewards (I also only open cards that waive my annual fee, and cancel any that try to make me pay to keep it open. Keeping them open for free is good for my credit utilization and age). Sometimes, however, a specific card will offer 5x (or something similar) on certain categories for a limited time. If I could give Wallaby detailed information about how I value rewards, it would be nice to just have one card that I carry around.
I pay all my credit cards off monthly, and basically treat them as cash (so I'm not the target consumer of a rewards card, I know).
This is true. However, the point of these offers is to rope in people who think of credit cards as "free money." I don't think Wallaby will drastically reduce the number of marks for these companies, since the people using Wallaby are going to skew smarter.
Majority* of people I know that use credits cards and pay minimum required amount are not dumb people. If anything they do not have a choice. Living from payday to payday will do that to you. Unexpected event? Time to pull out that credit card. It sounds so easy to just bunker down and break the cycle, but then whammy unexpected event.
Santander UK give 3% on fuel, 2% on department stores and 1% on household bills. It looks like Lloyds are going to introduce a similar scheme soon too.
Read the fine print. There's a £24 annual fee, fuel rewards are capped at £9/month, and you only get rewards at select stores which they have no doubt negotiated a promotional deal with.
Meanwhile UK interchange is no more than 1%.
Perfect example of what I'm talking about. Those figures are based on a certain model of reward utilization which is retarded by rules and limits. If that model changes and more people exploit the reward program, the program will change. The math has to add up.
The low interchange fee would appear to make these programs more viable in Europe, not less. The interchange fee is an operating cost that US banks cannot avoid. If they're giving me 1% back, and they're paying 1.65%, that's a net cost of 2.65% Take the same program in Europe, where transaction fees are < 1%, and the maximum cost to the bank is 2%; probably less.
The prevalence of these programs in the US would have to be attributed to some other factor(s). I'd posit that it is due to the American obsession with credit, and the intense pressure for growth in the US financial industry.
The point I was trying to make was that we don't have as many rewards programs in Europe because we're behind curve, and they are starting to appear, not because of low interchange.
But those restrictions are significant and prove that low interchange is a big factor. It's why the only way to do it in Europe is with even more tricky rules and promotional deals, which limits its appeal.
For example, my Chase Sapphire card gives me 1% cash back everywhere and 2% on restaurants.. all of them. Whereas Santander only offers it at certain chain stores. That's because of interchange.
Australia here, definitely wouldn't catch on (IMHO). Nearly everyone I know just has 1 major card, their primary bank card, which works as a debit and credit card in 1. Some people (like myself) have a 2nd card, a credit card for major purchases, that has better interest rates etc, but that one isn't used as much.
Most the other cards we carry aren't bank cards, they're Medicare (if we get hurt), drivers license / ID, and RFID cards to get into work or your apartment building (I have 2 of them)... and all these cards, these "one card" startups can't replace.
Unless they can replace my entire wallet with a single card, that works as a drivers license, medicare, debit/credit card, and RFID card for my house, then you're not really offering anything special.
Australia is a regulated market that abolishes the high interchange fees that power the reward programs in the U.S. This is specifically for the U.S. market.
> Australia is a regulated market that abolishes the high interchange fees that power the reward programs in the U.S. This is specifically for the U.S. market.
Another Aussie here, and I could maybe be interested. I typically carry at least 3 cards on me: credit card, AmEx, separate bank keycard / debit card, plus coffee loyalty cards. I can't always remember if a store takes AmEx (high Frequent Flyer point earnings), or if they do take AmEx but impose a 3% surcharge (negates the FF points benefit). It would be nice to have just one card, that automatically knows the best card to use at each store.
But without support for PayWave / PayPass / Chip & PIN, it's DOA in Australia. I want a card I can use when traveling to Europe as well (requires Chip & PIN). And Coin has a sleeker Uber-esque look to it as well - that rainbow on the Wallaby card doesn't exactly say "luxury" or "exclusive". (Not that it has to be, but it'd be nicer to drop a black / carbon card as an early adopter, not a plastic thingy called "wallaby" with a rainbow.)
US card-issuing banks compete by offering varying bonuses for using their card. Typical offers will be 1% cash back or 1 frequent flier mile per dollar spent, but this can flex up to 5X in whichever category that particular card specializes in, often linked to a particular merchant.
If you can shift the lion's share of your purchasing onto rewards cards, you can bank hundreds of dollars per year, especially if you use the card for business travel and expenses. There's an opportunity for that to increase by 2X or more if you can put your purchases on the "best" card.
I live in the US and I don't get it, either. It can't replace my whole wallet - I see the utility there - so instead my wallet is.. a few mm thinner? With x extra added points of failure?
I'm a single data point, but no, it's not a problem I have. My wallet is thick, but getting rid of the charge cards (only) in my wallet doesn't solve any pain point I have. But then again, Snapchat doesn't solve a problem I have either, and somehow they're worth Billions, so what do I know?
Living in the UK, I have only 1 debit card, which works just fine. I don't need to build a credit history and credit cards don't offer much in terms of rewards so there's no incentive to live in debt instead of only paying for what I can afford.
What is the problem is all the loyalty cards. I sign up for any loyalty cards even if I don't plan on going back. Design a way for me to have all of them on me, and remind me to use the right one when I'm in the location, and I'm sold. Currently I just leave most at home, leading to under-utilization without careful planning.
I've got a United airlines CC, an Amazon CC, a dining rewards card, and then 2-3 other legacy credit cards without fees, and three debit cards for different bank accounts.
I'm european too but I've been living in the US for a few months now and let me tell you I haven't seen in Europe
anything even closer to what they have here with the cards. Some people stock rewards/bank/miles cards like who stocks cans of soup in the supermarket.
I know it's not directly related to the consolidation card topic but I even have friends who use their father/mother card using their own signature which I don't think is safe because, even if their parents authorized them to use the card,
the usual way to verify that you are really you is through the signature and I doubt nobody checks you signed with the
right signature in a greasy reastaurant check, so basically I'm pretty sure anybody could steal your card, use it and
you would realize just after seeing the charges on the bank statement.
A consolidation card is maybe a way to solve the problem. Another way which to me makes more sense is not to sign up for every damn card in the country which most of the time end up collecting dust in the wallet.
I do have several cards (even if most of them are rarely used). I think a big difference is, that we still have coins. I see all those wallets on kickstarter that are useless for Europeans as they have no space for coins.
I'd want a single card and I'd want one of those sleek wallets if all I had were cards and bills.
a debit card, a credit card, a backup credit card and my corporate card
I would love a positively fail safe solution to get this down to one card, but to be honest, neither of these top stories offer that. Because at the end of the day, the most common reason for failure in my standard use case is user error on my part.
Oh so your bank issues a debit and credit card merged together? How does that work? This sounds fascinating.
I am from India, I have multiple cards but most because there is a surge of credit card offers in India, most banks are providing free credit cards and offers to get people signed up.
So many of those cards are just used to utilise those offers to get discounts and a certain select websites for discounts.
But I practically use my debit card, a credit card hooked to online payment services ( paypal et all ) and a backup credit card when I cross the limit of my other credit card. That's all.
One other card I use is just when dining out in which I get some % discount/cash back offers thats all.
Okay. The chip based cards. So you need to have credit and debit account(s) in the same bank, right?
That sounds good and very handy.
The chip based cards ( EMV ) are being introduced in India, rather RBI ( Reserve Bank of India - Controls monetary policy of India) has made it mandatory for all banks to replace the present cards and make them all as EMV.
But its not to merge them but to reduce the frauds.
In the US, a debit card can be charged like a credit card but the funds are obviously deducted from the balance on your bank account. It also lacks the protection and rewards that a typical credit card would have. I just want to clarify that you indeed have two separate things here on one card and its nothing like how the US does it correct?
Yes they are separate, debit uses my bank account directly and credit is invoiced every month separately.
The selection process is very simple, you just put your card into the machine (almost all the cards nowadays are chip based nowadays but there is also a magnetic reader usually on the right), something like this
I'm an Indian living in the UK and don't have this figured out yet. What's the difference when you select to pay by credit, if the balance is paid automatically from your account at the end of the month, instead of being debited immediately from your account? Or do you have to manually pay back your balance?
Well, there's the obvious difference, that the money stays in your account for longer with a credit card.
There are legal differences, too: credit cards are regulated by the Consumer Credit Act, which makes the card issuer jointly liable in many cases. So, for example, if you order a product with a credit card, and the retailer goes bust before supplying it, the credit card issuer is also liable. If you'd bought it with a debit card, you'd be out of luck.
Finally, if your card details are compromised, you've slightly longer to sort things out with a credit card: with a debit card, you could find yourself with no cash at all.
I've seen this in some countries in mainland Europe. Problem was it asked me on my regular UK debit card, had no idea what to choose, trial and error until one of them didn't spit my card out... Thanks for enlightening me
Most American banks offer a debit card which is functionally identical to credit from a seller's perspective, but it is still debit (and thus does not attain rewards or build your credit history, also disappears from your bank account immediately).
I used to use my credit card almost every day in America, but now that I'm in Japan I don't even have any credit cards. A lot of places don't accept them, so I just use cash everywhere. The one card I have is a bank card that I use to withdraw money from ATMs, mainly at 7-Eleven. I don't really like having to buy gift cards to use on Amazon, but it's just a minor annoyance.
A nice thing that we have here in Portugal are "virtual credit cards", offered by the banks, which act like a credit card for the merchant but as a debit transaction for the user.
So the bank gets to charge the store a transaction fee and you don't get the benefit of the bank floating the charge for 30 days? That sounds like a good deal for the bank!
I'm living in the UK right now, and I'm the same as you with having only one card. However most of my friends have several credit cards, which I find really strange. I wonder if it's a symptom of how broken the economy is... It's too easy to get multiple credit cards and use them all to pay each other off, so you're essentially living in constant debt.
I don't think it's a symptom of "how broken the economy is". If you're paying each off when it's due, it can be a good way to make a small chunk of change.
Well, I have a debit card - which I use for pretty much everything that isn't a business expense. I also have a personal credit card which I use very occasionally in situations where a debit card won't work (e.g. getting Euros from a ATM in Schipol airport) and an "emergency" personal card that I use in situations where neither my debit or main personal credit cards work (about once a year so far).
If you do not have at least two cards here, you do not understand how the domestic credit bureaus work. It is a major factor in determining your credit-worthiness for everything else you do. In countries with higher levels of home ownership and expensive education, it matters a lot, and it is not necessarily all about using them for consumption.
I'm European too (if you count UK, some don't), and I have way too many cards, like 30+. I've add to trim down to 4 and keep some more in my bag. Tried some of the apps that let you put in the cards and it shows a barcode, but that barcode doesn't always scan on some of the barcode readers so you actually need the card.
It's not really an issue for me. I have four cards and don't mind having them all in my wallet. What seems to have happened is a bunch of people with the same idea panicked and put out releases at the same time to avoid looking like copycats.
Oddly, for me, the killer feature on the "Coin" card is the proximity alarm if you leave your card behind. I've repeatedly left my card at restaurants after paying, or left the house in the morning without my wallet. Err. However, I would hate to have to bring my credit card with me when I go for a jog.
Personal debit card, business debit card, personal credit card(s), business debit card. Loyalty cards, gym card, even drivers license (although the magnetic stripe for the drivers license is of limited use - airports and car rentals)
I would say there is a difference in mentality, from what I have seen in the US, they like to hoard stuff, and they always take credit for everything like there is no tomorrow.
They don't really have this idea that you should avoid credit, and should you take one it should only be for (hopefully) productive investment, they buy TVs, clothing and food with credits.
Not uselessly using borrowed money for everything can actually hurt you the day you actually need to borrow money because they will consider your econ. 101 attitude (save before buying if it's not an investment) a "risk".
You can have a credit card and carry no debt on it. One way is to simply not use it. For example I have a card that I rarely use but in an emergency I could spend up to $X without tapping my bank account. This can be very handy since you can use a credit card to pay for a hospital bill, a tank of gas, or a hotel room, but you cannot use it to pay rent (typically done with a check).
The second way to do this is to take advantage of the grace period. Every purchase you make gives you a roughly 30 day period where no interest is charged. Pay off the full amount during that period and you simply use the credit card service for free. If you do this you end up ahead: typically credit cards offer benefits for using them. For example American Express gives you an extra year of warranty on most items. Lots of them give you cash back (1% or more) or "miles" or "points" you can redeem for various goods. Most cards do not have a yearly membership fee either so you end up getting everything you buy for a small discount.
It is true that some portion of Americans do "carry a balance": do not pay off their balance at the end of the grace period and must pay a finance charge proportional to the amount they did not pay off. However, this is usually not done by choice but out of necessity. I would do this too if for example I had to pay for an emergency trip to see family but did not have enough savings, etc. As long as you pay things off quickly, you are not really getting trouble in terms of losing substantial amounts of money.
But can't you just have one emergency thing on your bank account like we have in Europe? it's an overdraft authorization, it's linked to the bank account, you have only one, your card is linked to it, and it doesn't enter into the picture as long as you don't need it. But for emergencies, it's mostly the whole point of saving accounts, an umbrella for rainy days (and a downpayment for when debt will be right tool).
Moreover, I think the grace period it still a debt even if it carries no interest, it's the bank tempting people. You can still accrue it more than your account size, it's still borrowing without thinking about what the revenu the spent money will bring.
Debt is a financial tool like others (like selling capital for example), but I really think its use should be restricted to productive investments, and its overuse is a big problem. It's a useful dangerous tool, like a chainsaw, if you're not a lumberjack there is not reason to use it everyday, but it's practical if you make your own wood.
In the US overdraft is usually very high rate and carried a flat fee too. Accredit card would cost you much less.
A credit card is not automatic debt. It is a line of revolving credit. Think of it as an abstraction on top of the money you already have on your bank account. Additionally, credit cards provide additional protection, such as fraud prevention and charge backs. Yes you can misuse them but... Don't?
Edit: I guess a better way to phrase that is that a credit card is the ability to take out small short term debt in real time. And potentially pay it off for free.
Almost everything I buy is on my credit card. All my bills, all my food, gas, insurance. Everything except my mortgage payment. I make hundreds a year in rewards points, get great warranty protection on items I purchase, get automatic rental car insurance, and other benefits I can't remember now. I also get to yank my money back from unscrupulous vendors if I need to, instead of hoping they'll return my money. AMEX will go to bat for it's members.
The only thing I have to do is pay the bill in full each month. I can't imagine letting people have access directly to my bank account.
That's not really an option in the US. So to once and for all address your main point:
1. Yes, the US system overall is less than ideal. Banks could take initiative to simplify the system and the consumers probably should demand that they do.
2. American consumers are not somehow more stupid than people elsewhere. Introduce the same incentives elsewhere and people will follow the same pattern. The only reason other countries seem not to get into as much personal debt is mostly because loans are not as widely available and ones that are cost much more. In the US this used to be the case during the majority of the 20th century. Since relatively cheap credit became available, americans started taking advantage of it. This has nothing to do with whether they are smart or stupid.
Pretty interesting. Here's my guess at how this works:
Wallaby is both a card issuer and (working with) a processor. The merchant's processor routes the charge to them like a normal card. Then Wallaby selects the appropriate card number and proxys the charge via their own processor to that card's issuer. I.e. the same round-trip transaction, they're just a man-in-the-middle swapping out card numbers. The issuers never see a difference.
Couple issues they'd have to have worked out for this:
1. Getting approval from the card network to proxy a transaction like this. Given the founder's background with Green Dot I can see them having the pull to drive that.
2. Dealing with chargebacks. The merchant will have a record of the Wallaby card number because that's what's swiped through the POS. But the customer will see it on their actual card's bill (let's say Chase). If they file a dispute, and Chase contacts the merchant, there's a card number mismatch. I wonder what their solution is for this. Perhaps they instruct cardmembers to initiate disputes with them and they proxy those as well.
Overall I have to say I like this a little better than Coin, if only because it's simpler. You don't have to make any decisions each time you pay, you just configure it through the cloud, which can actually make smarter decisions for you. And it's not $100.
This looks like it work great for optimizing/consolidating personal cards, but one advantage Coin offers is the flexibility of charging normal purchases to a business account. I'm not sure how Wallaby could discriminate if my restaurant meal or office supplies are a business expense or just personal use.
Either way I'm all for any innovation that thins out the number of cards in my wallet (with the goal being zero.)
True. But it would work with all of your personal cards, which is the main proliferation problem.
You could use them together. Get a Wallaby as your "one" smart personal card, and if you feel like springing $100 to go from 2 cards down to 1, you've got Coin.
Personally I'd be a tad worried about handing my Coin to a server to charge a big business meal. What if they accidentally tap the button and switch to my personal card when they're holding it?
I'm stumped as to how this can work. The logic can't be embedded in the card, as the card doesn't know what you're charging to it -- the merchant's category code (i.e. gas station, restaurant) isn't programmed into their terminals, that data gets relayed through the various backend networks between banks.
So this can't be sending a card swiper the number of one of your cards, which means it must be a valid credit card itself. It has to be issued by some Visa/MasterCard/Amex/Discover member-bank to be widely accepted, though none of those logos appear on the website's mockup.
If that's the case, I still haven't a clue how they turn a capture against their card into a capture against one of your "real" cards based on the type of store you used it at. They can't be charging your real cards themselves, as all the charges would come from a single category code, whatever one was assigned to their own merchant account, so you won't get the right rewards. They'd also lose money on every transaction that way, as they'd have to pay card-not-present fees to charge your cards themselves, while only collecting lower card-present fees when you use the Wallaby card.
Puzzling. They must be trying to get some kind of relationship somewhere else in the network that no other company has (either direct relationships with issuers, or permission from Visa/MC to sit on the processing network somewhere and do some kind of MITM).
My guess is deals with the issuing banks / companies.
Here's my thought process: the parties running rewards programs are doing it because they want people maximizing their spend a) on the card, because spending -> interest and b) on the items / shops / etc that they are incentivizing, because they have backend deals (such as being the airline that is incentivized, or receiving affiliate fees from retailers with low costs).
It doesn't even seem too ridiculous to me that they would be able to work out 0 fee / passthrough rates with the bigger players based on those incentives, though it would probably be a first!
I think how it works is that the charge initially goes to Wallaby so the merchant is paid. They then charge the amount taken from Wallaby from one of the listed cards according to where the charge originated from and which deals your listed cards have.
If you use your Wallaby card at a gas station, then Wallaby separately charges your card that offers cash back on gas, you won't get any cash back as Wallaby's MCC is not that of a gas station. They'd also have to pay transaction fees every time they charged one of your cards, and those fees would necessarily be higher than any fees they could collect through usage of the Wallaby card. That can't be what they're doing.
They'd have to talk to the processor to allow them to identify as "gas station" or "grocery store" and so on depending on where it came from. I'm sure there's a way to do this - there are many third-party processing systems that do pretty much exactly the same - process transactions from different vendors and put labels on them depending on who actually sent it.
Absolutely not. A second charge would result in Wallaby paying extra interchange fees on everything which would kill them. They also wouldn't be able to authorize properly.
A "network switch", yes, but not using that particular method. They must be a real-time MITM proxy.
they'd likely be a card processor-- the one who receives the auth request from the swipe terminal and responds with whether or not the charge is approved. they then relay the original request to one of your cards.
Slightly off topic, but it's sad to see so much brainpower and energy go into "innovation" in the financial sector.
We (society) have created a complicated game involving credit cards and we have to continue playing the game otherwise we lose. Merchants charge higher prices because they need to pay a 2% merchant fee, then the credit card "rewards" us with 0.5% back. Madness.
If the blizzard of credit card features--cash back, reward schemes, loyalty plans, interest options, perks, airline points--all disappeared, it would be a huge net benefit to society.
I realize it won't get fixed. It's sort of like simplifying income tax legislation. Almost everyone would benefit even if the amount of tax collected remained the same, but there's no mechanism to even start doing it. Same thing here with the credit cards.
That's a good way of putting it.. "we have to continue playing the game otherwise we lose."
But we didn't create it. Visa and the banks did.
Visa was able to win over so many banks by offering the highest interchange fee. Remember, card network customers are banks, not you, so they're actually competing to raise the fee that merchants pay (interchange) that gets passed back to the bank that issued the card. In a masterful example of leveraging network effects, Visa was able to come up with the highest fee that still had wide acceptance by merchants.
This pissed merchants the hell off. Theoretically it may have increased prices by 2% in general, but it's hard to say. That's part of the "genius" too, it's designed to be a small enough fee to be a rounding error that merchants just eat.
It did have one advantage for consumers: it made Visa accepted absolutely everywhere by further driving its network effects. (And Mastercard too which followed the same model.) As compared to networks like AmEx or Diner's Club, for example.
What happened then is the banks started competing with one another with reward programs. This basically took the margin out of the interchange and returned it to the consumers. But only if they "play the game" and know how to play it well.
So what we're left with is a silly game consumers have to play to get their 2% back, which merchants really hate.
This has been "fixed" through legislation in other countries. Australia for example. But guess what? They did a study and found that merchants did not lower prices. They just kept prices the same and enjoyed an extra 2% margin.
You are wrong for thinking that these innovations aren't helping society.
Even a brief thought about it and you can see this is much better than having to go to your bank, withdraw a large sum of money, walk to the shop with that large sum of money.
It helps business, reduces the transaction friction.
I once actually pondered that wouldn't it be much better if the government controlled internet search rather than google. Fairer? Less open to their constant land grabs from other aggregators? No advertising?
Can you imagine what a nightmare that would have been like? What a silly idea that thought was?
That's essentially what you're saying about a different industry.
> go to your bank, withdraw a large sum of money, walk to the shop
I was speaking about frilly credit card features that force us to play a complicated game where we pay more for stuff and then get some money back by signing up for the right "reward" card or collecting points or miles or whatever.
Obviously, I'm not suggesting that everything should be cash. Electronic payment systems (credit/debit cards, wire transfer, Paypal, hopefully Bitcoin) are essential of course. (Often badly implemented, but essential.)
If we magically switched a perfect/lowfriction payment model, merchants would benefit, and consumers would benefit, but in ways invisible to them; while losing smaller visible benefits - so they wouldn't "see any benefit".
On the other hand, all the infrastructure partners - i.e., anyone who actually can change the system, would lose out on this lucrative rent from the transaction fees.
The only way to change that is by force from above - EU SEPA legislation is in the right direction, but IMHO not enough.
You don't understand why tax code is complex. It's not complex because we don't know how to make it simple (that may be true but that is not the real reason), but because politicians explicitly do not want to make it simple. Making it simple would remove a very powerful way to control behavior from them, and if politicians of (almost) all shades hate something equally it is not being able to control something. The tax code is complex because it's not only tax code (i.e. means of extracting money from people to fund the government) but a vast regulatory engine.
Credit card rewards are complex because competing on price only is hard and brutal and if you're dealing with commodities - and credit card access from the issuer side is commoditized - it drives your margins down into unsustainable territory pretty quickly. So people invent all kinds of schemes that they can compete on without getting into direct price competition. I don't see how removing this would be a huge net benefit to society. I like getting 2% back from my every purchase and 5% back from certain ones. Yes, I know these are the same 2% the merchant is charged with, but credit card companies won't work for free. So I have a choice - either they charge merchants less and don't care about me - i.e. don't entice me with rewards and so on - or they charge a bit more and give it back to me as a reward. I personally like it better when they compete for my attention - that's kind of a relationship that usually leads to a better service than "you're not the one actually paying us so we'll take your call in next 2 hours or so".
I'm pretty sure loyalty programs are good for the smart consumer. I would speculate credit cards were all competing with one another while charging a 2% fee. They all wanted to go lower but couldn't and needed something to compete. Enter loyalty programs, designed to attract your attention but be too confusing to actually use.
TL,DR - I would guess cutting loyalty programs wouldn't lower credit card fees.
The interchange rate charged by the card network (Visa, MasterCard, etc) is determined by the type of card presented. Rewards cards are charged a higher fee because they're reward cards (the rate is literally called "CPS Rewards"), and that extra money ends up back with the card-issuing bank who's paying the rewards. If you head into your local convenience store and pay with a cash-back card, that store will lose a larger percentage of your transaction than if you had handed the very same cashier a basic non-rewards card.
But naturally there should be at least one other competitor for a service like that. Then we'll need another service to combine the two aggregator-aggregators into a single super ultra card.
Seriously though, you could link all of your cards to Wallaby and then store all of them + Wallaby on your Coin. That way you could use Wallaby's optimization when you want to or manually choose the card to use.
I was more surprised at the incredible amount of buzz generated for Coin as if it were some totally new idea. I couldn't think of the name for most of the morning (Protean Echo,) but I remembered seeing this concept a year ago... Very happy that the others have been posted so people can realize it's not new or unique. As for the idea itself, I find it hard to believe the market for extreme-first-world-problem-users is large enough for any one of these companies, let alone all three. My morning commute photoshop: http://bit.ly/1at9PLO
I don't understand how this could work. How can they 'forward the purchase' to the appropriate card in such a way that the receiving card still sees your purchase as being from a 'gas station', or 'grocery store'.
PayPal doesn't do any passing-through. The entity you are paying is PayPal, and separately PayPal is putting money into the recipient's PayPal balance. You wouldn't get a gas station discount even if a gas station created a PayPal account and accepted your card with a PayPal terminal.
Their security page [1] needs some work: apparently they "use SHA 256-bit encryption across all of our solutions" and "your personal account information is never compromised". SHA-256 is a hash algorithm, and it's not very clever of them to state that users' PII is never going to be compromised. Someone with an ounce of computer security knowledge needs to rewrite this page, quickly.
Good points. We have upgraded our encryption scheme since writing this page. I think trying to explain security to lay people and make them confident is a difficult challenge. We'll get this updated and re-written.
Sorry, but ccTLD domain hacks and financial services don't mix well. Financial services should be stable and secure, their front page even embeds a Vimeo video over plain http.
I don't think there is a way to fix the https Vimeo issue. It's been a problem on a couple of the sites I've worked on for years and Vimeo acknowledges the problem but refuses to fix it.
Regarding domain hacks: times are changing and it's becoming more mainstream, evidently even for financial services; perhaps only the cooler ones though.
Interesting... Suppose it is a Visa card on the frontend and then on the backend I have Amex linked. Will the merchant be hit with Amex fees? Will it be accepted if merchant doesn't accept Amex?
coin takes in debt and gift cards - which is more convenient for me, wallaby seems to be only for credit - I only have one credit card, I didn't even know you got rewards for using them.
Bitcoin has a long way to go in terms of proving security (not algorithm security, but practical "in use" security) and convenience before it it's a Blu-ray/Netflix dichotomy. These last few weeks, with millions of dollars lost in bitcoin hacks reinforces that perspective, I think.
I wish I could see some customer validation videos where they went on the street and asked random consumers and merchants if they would find this product (and Coin and others like it), useful as well as hear their concerns. Since I doubt that sort of customer validation work was done in that way (random users vs. specific focus groups, if at all), my impression is that it would be a video full of people saying "eh, maybe, but what about..." or "no, I don't have that problem" or "yeah, it's interesting, but I don't use my card(s) that much or in that way"... or "yeah, but I won't pay extra for that" or maybe "sure, I like it as a consumer" or "sure I'll accept that as a merchant".
Could I put all my credit cards in a Wallaby Card, and then put my Wallaby (and debit and reward cards) on a Coin Card? If so, I'd have just one card (Coin's pain point), but I'd also get Wallaby's "smart routing" for miles (Wallaby's pain point).
Even better, get the Loop case for your phone and carry zero cards. It emulates the signal the reader would get from a magswipe wirelessly, so you just hold your phone near the reader. It's supposed to work with credit/debit/loyalty cards like Coin and is shipping soon, not next year.
Well technically the part that allows you to pay is shipping next year...
Also this doesn't solve the problem that is being discussed in the coin thread of imprinting and buyer verification for the merchant.
Still, This is the technology that cell phones should be including on a hardware level, not the stupid NFC thing that doesn't work for most US POS. I don't have an iphone or else I'd be contacting them right now asking if I could get in on the action even though I'm about a week late!
What they should do is connect your cellphone account to this and that would allow the carrier verify your identity (if you're on a contract).... I'm sure there's more here that we could do, maybe have an option to silkscreen the your id of choice on to the back of the case...
People this needs to be made to work NOW!! I use the ninja wallet and even that is too big and bulky for me, if I could get rid of the whole thing and just carry it in my phone the world would be a better place!
How so? It's extremely short range, the only thing that can read it is the terminal you were about to give your card to anyway. It's not broadcasting while in your pocket, so nobody's going to read your card by bumping into you.
Magnetic field falls off at the rate proportional to one over distance cubed. A huge NMR magnet that will suck you in by you wrist watch at one meter is a harmless hunk of metal at four meters (approximately).
For me, and for many others I'd imagine, maximizing my credit-card-rewards does not trump having control over which account I'm using. Coin is better suited to my needs.
WallaBy + Loop will make a good combo - put all your cards in one WallaBy card and put one WallaBy card in to Loop. So your phone will have only one card and your point of control will be WallaBy. Hiding all other cards details - block one card and you are safe. Coin card is not going in the right direction i feel. Time to loose the card stuff now...
Interestingly enough, I've just got a new card from one of the major banks and it has the chip. Looks like US banks starting to warm up to this chip idea.
The main problem with cards, isn't necessarily the number, rather the speed. Nfc is the fastest implementation so far and both my credit and debit card have it, and I will gladly carry around an extra few millimetres in my pocket to speed up the transaction process.
I can't understand why you people use more than a single card for payments? That solves all the problems that these Coin and Wallaby cards are trying to address. Rewards are bullshit anyway, I buy stuff from honest companies without any kind of reward systems.
The value they offer seems to be: get you the most rewards by using the right credit cards.
I'd like to see some numbers. Are there beta users? If so, how much are they saving? If not, how much does Wallaby predict they'll save their customers? .1%? .5%? 2%?
Great concept, but I don't know how comfortable I am giving them access to all my accounts when all they do for me is choose which card to charge. And how do the purchases show on my card statements? Are they all from Wallaby now?
At Costco, you can only pay with American Express and at their gas station and store register, the card also doubles as a membership card, so since they don't explain how their card works I doubt that it would work for Costco.
I was thinking the same thing. I wonder if there are any consequences to having Belarus have domain over your--well--domain. It is a modern country with a well educated populace, but its government is Europe's last dictatorship. I imagine there aren't consequences, but you have to wonder if the founders considered any of the legal issues with spinning the globe to find a country with a matching top-level domain.
I have several with time-varying bonuses (Discover and at least one other change their bonus categories quarterly and there are other specials for other cards). Beyond that, many of the bonuses have caps and other interactions (e.g. sometimes Discover's bonus on Amazon transactions is better than the original card). Something that manages the transaction routing for me is valuable, even beyond consolidating cards.
the wallaby card sounds pretty awesome. i just checked out their mobile app and tested a few places out and the rewards were accurate on my Chase Freedom (which has rotating categories each quarter).
This is getting to remind me of XKCD on standards. The wonderful thing about having too many standards is that somebody comes along to create a new standard intended to unify and replace all the other ones. Then you have N+1 standards to choose from.
That said, I do think adding an extra level of indirection to any customer/merchant transaction event is a Good Thing. Allow the customer to pay in any manner he chooses that otherwise satisfies the merchant. While doing so in a way where the customer can be confident his payment identity/authorization is not hijacked and repurposed, or reapplied, or TRACKED, without his permission or knowledge. We still seem to be in this era where POS payments are catching up with what software engineers knew at least decades ago would be a smarter solution.
I have a card. It is hooked up to my bank account. It works.