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Will Stratos Make Consumers Forget Apple Pay?

In a payments marketplace already crowded with plastic card consolidators such as Plastc, Swpe and Coin, and mobile payments solutions such as Apple Pay, Android Pay, Samsung Pay and PayPal, Stratos hopes to encourage consumers to pay for plastic that will replace other plastic cards in their wallet. Are they too late to the party?

In a marketplace that seems to be introducing the ‘next best thing’ in payments on a daily basis, Stratos hopes to break through the noise with a payments solution that looks vaguely similar to Coin, a social media sensation that has yet to live up to the initial hype.

Similar to other all-in-one cards Coin, Swyp and Plastc, the Stratos Card is intended to replace multiple pieces of plastic already in a consumer’s wallet with another piece of plastic. Unlike the competition, Stratos is using Bluetooth technology and has answered many of the concerns with other solutions around security, acceptance and introduction delays. The Stratos Card will be shipped beginning in April.

Developed behind closed doors with $7 million in venture capital funding (as opposed to the more public option of crowdfunding), the team at Stratos, headed by 25-year old CEO and co-founder Thiago Olson believes they have created a payments solution for people not yet ready for mobile payments. Olson explained to CNET that the Stratos Card is “like an iPod for your wallet.” He said: “Just like an iPod digitizes and stores all your CDs and music, Stratos stores all your cards while adding security features and FitBit-like card tracking.”

Stratos Card & App 2

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Not Your Mother’s Credit Card

The Stratos Card is unique in many ways compared to traditional credit and debit cards or even the newer wave of all-in-one plastic card payment solutions. Some of the differentiators include:

  • 100% POS compatibility: Using dual magnetic stripe technology, the Stratos Card can be used anywhere a traditional credit or debit card can be used (including gas pumps and other locations where other solutions fail). Stratos promises ‘100 percent compatibility’ from point-of-sale machines to dip readers.
  • Membership model: Similar to Coin and American Express, Stratos charges a ‘membership fee’ for use. The one-year membership is $95, while a two-year membership is $145.
  • Bluetooth Technology: The connectivity of the Bluetooth enabled card allows the user to connect up to 3 different cards to the Stratos Card. Additional cards can be loaded into the smartphone app with a swipe device, with the selection of card to be used determined by pushing one of three flashing lights on the Stratos Card.
  • Geo-Locational Engagement: Because of the Bluetooth connection to a user’s smartphone, Stratos will be able to provide ‘smart suggestions’ based on geo-location and history.
  • Enhanced Security: In addition to a patented security card lock down capability, the Stratos Card is PCI-DSS compliant and will use tokenization for each payment, minimizing the potential for stolen credit card numbers. No account numbers will be on the face of the Stratos Card. On the back, dual magnetic stripes run across the top, with a signature stripe on the back as well.
  • Custom Design: A user can select among several color combinations to personalize the design of the Stratos Card (I selected black and grey as opposed to several other color options). Printed on the front is the Stratos Card logo, the owner’s name and a non-embossed membership number (no actual credit card number). The three touch-sensors are placed near the right edge of the card.
  • Customer Support: Customer support will be provided by phone, social media and email.

According to Olson, Stratos is hoping to provide a unique payments experience for customers. “We want to provide a lifestyle brand experience by offering a membership that includes card upgrades, replacements, special offers and white glove support.”

stratos_case

Stratos Card 1

How The Stratos Card Works

Similar to other all-in-one solutions, current credit card information is stored in a corresponding mobile app using a small card reader that plugs into a phone’s headphone jack. By swiping a credit card, debit card or gift card through the reader, the card information will be stored in the app and transmitted to the Stratos Card when a person wants to pay.

While there’s no limit to the number of cards that can be stored in the app, the Stratos Card itself holds only three cards for quick access. Three touch-sensors on the front of the card correspond to each card selected, allowing the user to choose which stored card they want to use. The Bluetooth connection to the customer’s smartphone allows for additional card choices to be made.

When a consumer taps one of three flashing lights on their Stratos Card, their mobile device pairs with the card, allowing the user to receive instant notifications on the mobile lock screen for location-based suggestions as well as reminders of the three cards loaded. The location-based suggestions may include loyalty or rewards cards for selected retailers, gas stations, etc. There is also instantaneous feedback as to which card has been selected when pressing the touch sensor.

Enhanced Security

The Stratos Card is unique in many ways, including that it is the only all-in-one plastic solution that doesn’t display card information on the front of the card. While not necessarily ‘high tech’, this makes Stratos potentially safer to use, since the user’s card number won’t be given away if it’s stolen.

On the technology front, similar to Apple Pay and other newer payment options, the Stratos Card uses bank-level encryption as well as using a tokenization feature that creates a new, unique credit card “token” number each time it’s used. Since the retailer never sees an actual credit card number (just the token number), there is less potential for a breach like what occurred at Target.

While the Stratos Card does not have a chip, and therefore is not compatible with contactless NFC card readers, the company says it’s working on adding both features for future models, according to an interview with CNN Money.

Since the Stratos Card is connected to the user smartphone via Bluetooth, users can receive alerts in case they lose the card or forget the card at a retailer or restaurant. The user can also cancel the three cards that are loaded on the card.

If the user is separated from their phone for a specified length of time, the card goes into lock-down mode, making the card useless to the finder. This is similar to features on both Coin and Plastc as well as the new mobile wallet apps.

Stratos Lifestyle 4

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Will The Stratos Card Succeed?

Who knows? With so much innovation and new players in the payments battlefield, it is difficult to pick a leader, let alone a potential winner. Winners in the payments marketplace will most likely be determined by ease of use and meeting consumer expectations.

When asked about mobile wallet alternatives such as Apple Pay, Olson says that Stratos has the advantage that NFC POS options are still not widespread. While this will obviously change over time, Olson also believes that consumers will still have issues handing over their phone to retailers and waiters to process payments.

When asked about the issues related to the often delayed introduction of the Coin card, Olson told CNET, “We learned the importance of following through on promises made to consumers and how quickly things can turn sour after missing dates and not communicating properly. We intentionally avoided crowdfunding and early marketing approaches, because again we wanted to ship a product to our customers that is the real thing that works everywhere and is secure from the get go. We want to start our brand off on the right foot.”

If nothing else, it is fun to see the amount of innovation and activity taking place in payments.

Jim MarousJim Marous is co-publisher of The Financial Brand and publisher of the Digital Banking Report, a subscription-based publication that provides deep insights into the digitization of banking, with over 150 reports in the digital archive available to subscribers. You can follow Jim on Twitter and LinkedIn, or visit his professional website.

All content © 2017 by The Financial Brand and may not be reproduced by any means without permission.

Digital Banking Report | 2017 Marketing Trends

Comments

  1. Bill Warden says:

    The lack of EMV is the death null for this product. It is mandatory after October 2015 in the U.S.

    http://blogs.wsj.com/corporate-intelligence/2014/02/06/october-2015-the-end-of-the-swipe-and-sign-credit-card/

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