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COTA: Credit-card-consolidating Coin seeks to change how you spend

November 30, 2013

Remember George Costanza’s wallet? George, one of the main characters on TV’s “Seinfeld,” had a wallet so full of junk (Jerry called it “morbidly obese”) that it exploded, casting his receipts into the New York streets. If your wallet is creeping into the same category, you might find some interest in San Francisco startup Coin (www.onlycoin.com) and its first product.

The product, also called Coin, is a credit-card-size electronic wonder that stores up to eight different cards (credit, debit, gift, membership or loyalty) and allows you to switch between them at the push of a small circular button. Intended to allow you to combine all the cards into one sleek electronic version, it’s the same size as a normal credit card. You can swipe it in any conventional reader or an ATM.

Coin CEO Kanishk Parashar started down this path by working on SmartMarket. While downloads of the app were going well, the adoption rate was too low to be sustainable. Parashar realized the problem: SmartMarket required people to drastically change their behavior by processing transactions through his app. Instead, he began looking for ways to simplify what people already are doing. Coin became that solution.

“I learned a big lesson from my last company,” Parashar said. “We couldn’t change people’s habits. With Coin, we have a system that works now. It works today, but it has the technology for tomorrow so it will fit where we’re headed into the future.”

This relatively simple idea packs a surprising amount of technology. To be successful, the final design had to remain very small, since it needed to work in the same machines that accept credit cards. Coin has a magnetic strip like a normal card, but the magic here is that Coin’s patent-pending magnetic strip changes on demand.

To load your cards into Coin, you’ll use a small reader to scan them into the accompanying Coin mobile app, which then syncs with the device itself over Bluetooth Low Energy, the same protocol used by many fitness trackers. By using BLE, Coin expects the internal battery (which isn’t rechargeable) to last about two years. The battery is necessary to change the encoding on the magnetic strip and power a small black and white display that shows the name of the selected card, the last four digits, and the CVV number.

The 128-bit encrypted Bluetooth connection also enables some unique security features. For example, when Coin moves away from your phone (like after you hand it to a waiter) the button is disabled, meaning the selected card can’t be changed by accident. The phone app can also notify you if you’re walking out of a restaurant without the Coin in your pocket, averting the pain and suffering that comes with a lost card (or wallet).

If you lose the Coin itself, it automatically deactivates, further safeguarding your accounts. Coin will also feature a system that shows how many times your card is swiped and tell you if someone is using it when it isn’t near you.

To eliminate concerns about someone using the app and device to steal credit cards, Coin has said its app won’t let users add information for cards they don’t own—a feature that will be powered by a financial-data service such as Intuit.

Coin is available for pre-order now for $50 until Dec. 12, but will cost $100 for new buyers when it ships in summer 2014. It looks like the second time’s a charm for CEO Parashar: After the announcement last week, the company exceeded its initial $50,000 goal in just 40 minutes.•

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Cota is president and co-founder of Rare Bird Inc., a marketing communications firm specializing in Internet application development. His column appears monthly. He can be reached at jim@rarebirdinc.com.

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