Some Fintech startups are betting the world isn't ready for mobile payments.
Unlike services like Apple Pay and Google Wallet (which use your phone), all-in-one cards or "smart cards" embrace a familiar medium -- the plastic credit card -- and turn it into an all-in-one payment solution.
Smart credit cards primarily offer convenience while maintaining security. Instead of carrying a dozen cards (including gift and rewards cards), all your payment options are tidied up into one dynamic card.
Since many merchants aren't yet equipped to accept contactless payments like Apple Pay and Google Wallet, a smart card is one way to consolidate your wallet until merchants catch on.
It works like this: a card -- not unlike the form factor of magnetic stripe cards you currently carry -- is embedded with a Bluetooth connection, which it uses to act as a variety of cards. That smart card can act as your mileage rewards card, your debit card, and even your in-store club card.
We are currently taking pre-orders-- but if it sounds like an appealing alternative to mobile payments, getting one of these cards might be worth the wait.
How it works
The selling point on smart credit cards is that they offer convenience. Instead of crowding your wallet with many cards (including gift cards and club cards), one digital card represents them all.
Flye achieve this in an unexpected way. When you receive one of these cards, it comes with a magstripe reader that looks a lot like the Square or PayPal card readers.
Once you've confirmed your identity, you'll be able to add your "old school" cards to the smart card's app by swiping them through the card reader. (More on this under "Security.") Then, using Bluetooth, the app loads that information onto your smart credit card.
How can one magnetic stripe act as many different cards? Like this: When you select the card you want to use, an induction coil embedded within the card sends a signal that re-programs the magnetic strip.
The added benefits
Offering more than just convenience. The accompanying Smartphone app can also act as a place where you can manage your budgets and keep track of all transactions in one central place, much like Mint.com.
The Flye smart card can be updated with over-the-air updates, so expect more features to be added as the team at Flye smart card look for ways to make their product stand out from the rest.
Where they're accepted (or not)
They're just like any other credit card, so you should be able to use them everywhere, right?
Most of the credit cards in your wallet are actually equipped with two magnetic stripes, called "Track 1" and "Track 2." You can't see them -- they're usually masked under what looks like a single stripe. Track 1 is primarily used for your name, while Track 2 is used for your credit card number.
If a credit card contains both tracks, then your card will be accepted universally. Your Flye smart card will be accepted universally.
And, yes: smart cards can be used with ATMs.
As easy as a credit card?
Just like picking a card out of your wallet, you'll need to choose a card at the cash register. Flye makes this process as fluid as possible so that using your Flye smart card is just as easy as the way you pay for things now.
Security
Because this is an entirely new concept and product category, all four makers are taking a very careful approach to how your cards are stored, programmed and kept secure. Before we dive into card-specific approached, here's how (generally) all four cards work from a security perspective.
Flye will ship cards that are capable of programming EMV (or "chip-and-PIN") cards. These cards can also be used for NFC-based contactless payments (where you'd tap the card on the terminal instead of swiping.)
This is important because by the end of the year, a liability shift will take effect, and merchants who do not support EMV cards will be responsible for fraudulent transactions. In order to comply, more merchants will update their credit card terminals to accept these new cards. Those new terminals will likely also work with contactless payments like Apple Pay and Google Wallet.
