TechnoBuffalo recently received the new Stratos card, a smart card that’s competing with Coin and several other new options, including Plastc and Swyp.
Stratos operates a bit differently than Coin, one of the first options to hit the market, allowing you to store multiple cards, swap between them on the fly using sensors on the front of the card, and more. Curious to hear about the future of the space, we spoke with Stratos CEO Thiago Olson.
Our discussion spanned plenty of topics, including some set up issues we had with our Stratos card, the company’s future plans, the mobile payment space in general and more. Let’s dive right in.
TechnoBuffalo: Thanks for talking today. How has the Stratos Card rollout been so far?
Olson: It’s been great- one of the exciting things is finally getting it into the first customers hands. Demand has been really high. Connected cards in general have seen a lot of pent up consumer demand, though historically it has been missed promises and ship dates, so we’ve tried to as much as possible stay away from crowdfunding and presales for a product like this.
TechnoBuffalo: Let’s talk about support real quick. Our president Jonathan Rettinger bought a Stratos Card and it took him a long time to set up over Bluetooth. Sometimes the sensors don’t work. Can this be fixed?
Olson: These cards use Bluetooth so we can get general usage logs from the cards to help make it better. As we ship more and more out, we can increase the reliability of the card. Then, maybe someone’s battery level is running low, we can sense that and send a new card before it’s a problem for a customer. We can also apply updates to our app and the card through firmware releases. As for the sensors, we haven’t had many support reports of those not working properly.
TechnoBuffalo: Stratos card is $95 a year and includes upgrades. Why did you choose a subscription service?
Olson: We decided to go with the subscription model because we wanted to look at making sure every member who buys a Stratos card gets a great experience. The subscription model allows us to basically offer a higher level of support, and we can hurry up and get you a new card if you need one. It also allows us to keep you up to date on latest and greatest cards as we release new ones.
TechnoBuffalo: What’s coming next?
Olson: We’re already working on second generation card with NFC and wave-and-pay technology in it as well. There’s a one time passcode on the card – it’s called tokenization and is similar to what Apple Pay uses – it brings a whole lot of security into the way you’re paying. We can roll these out to people, and you don’t have an out of date card a year after buying it for example. You get an upgrade every year.
TechnoBuffalo: With Plastic, Coin and Swyp, it’s a crowded market. How do you differentiate yourselves in this market?
Olson: We really focused on two things when it comes to the product and manufacturing side: making sure that the product we’re making is manufacturable and we can hit our promises and dates with people. We’re trying to be as transparent as we can. There’s a big wait with checkout for Stratos now, but that dynamically changes as the orders fill up. You always know your estimated ship time.
On the tech standpoint, Coin couldn’t figure out the tech portion of the dynamic stripe. It’s a difficult problem because the stripe takes multiple tracks of information. If you have a single track of information on a single track, the card will work about 85 percent of the time. You’ll get random failures on POS systems that require dual track. That’s something the Stratos card can do with a higher success rate for our customers.
TechnoBuffalo: That’s been one of my huge pain points with Coin. I can’t trust it’ll always work, so I carry my wallet anyway. Can you guarantee Stratos will always work?
Olson: The success rate is higher than Coin, the number is in the high 90s and going up every day. As we get this data coming back, we can make tweaks to the card firmware. That’s a big differentiator. Also when you’re getting in the habit of using something, you want to be able to rely on it. We’ve seen consumers, at first, carry another card as a backup for a while. We hope to gain people’s trust as they use the card more and more.
TechnoBuffalo: When is the second generation card shipping with NFC and other new features?
Olson: From a hardware perspective, we’re trying to stay as close to 12-18 month iteration cycle as we can.
We’re not focused on the card as a piece of hardware or a gadget but also the backend too, to support what we’re building. We view ourselves as the iTunes for cards. You can digitize cards, store them on the cloud and download them when you need them.
We’re also building APIs so merchants can virtually issue a card to you. You could download a card with one click and use it physically at the point of sale. Imagine walking into Macy’s or Nordstrom and receiving a digital card right there, instead of having to fill out paper work and wait for one in the mail. We see a shift into just downloading all of these things.
TechnoBuffalo: Will banks ever issue these? Is Stratos a takeover target?
Olson:We are going consumer first but we are open to co-branding. Banks can partner with us, and we’re working with leading banks right now. They can co-brand with Stratos and get a connected card out to their members. The benefit there, for consumers, is that banks can swallow the cost of the cards.
The banks win because they can make their card the default card on Stratos. The virtual top of your wallet. That’s good when competing with other cards; traditional methods offer free plane flights and loyalty points, but a medium-sized bank can compete with a large player because they have, by default, the card on top.
TechnoBuffalo: What about transit? Any plans to enable the Stratos card to work on subways?
Olson: As a rapidly growing startup, one of the hardest things has been focusing on the core pieces. I will say that we certainly are interested in transit and have seen a lot of inbound biz-dev interested, and we’ve received interest from hotels, too.
Imagine skipping the front desk and going right to your room using Stratos. There are lots of use cases in access outside of just payments, and also in loyalty and gifting. Loyalty cards are the ones nobody wants to keep in their wallet because it’s extra plastic, but Stratos can add them and store them digitally and don’t need to carry one more card.
TechnoBuffalo: Where is this industry in 5 years? Are we just going to be using Apple Pay and Google Wallet instead?
Olson: When you look at new payment methods historically, things tend to stick around. We thought checks would go right away, but they’re still here. These new technologies supplement each other.
In Japan, where they have the most mature NFC/mobile payment infrastructure, only 17 percent of contactless payments are made over mobile, 83 percent of contactless payments are used with wave and pay cards. So there’s something special about that card form factor. It’s convenient to carry, you still have drivers license and other cards, too, and there’s a clear staying power of that medium.
Smart cards will be complementary to mobile phone payments. You might use Apple Pay at Whole Foods if you have your phone out and you remember. If you’re at a restaurant and you need to hand something off, smart cards are perfect for those situations. Connected cards leverage the phone.
That wraps up our interview with Stratos CEO Thiago Olson. Have any other questions you’d like answered about the space? Let us know and we’ll try to address them.