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via dpg (472) · I've launched several products. I've worked in Venture Capital. I'm passionate about helping others build successfully. 83181 views · 0 comments

Coin is trying to replace your credit cards (no other cards, like ID, Buss Pass, etc) with a single electronic card. You’re supposed to swipe your existing cards on your phone, take a photo, and your phone syncs up over bluetooth your credit with this electronic card you carry around. It stores data in plain text on your card, I’d also worry about power levels, stress on this card in my back pocket, and adding additional points of failure to my purchasing.

But this article isn’t about the security of this card, or the technology. That stuff is pretty basic. This article is about two things: Why I think this is a step in the wrong direction and why some people think their pre-order scheme might be illegal.



A step in the wrong direction

While I believe coin is an excellent exercise in engineering, I think it’s fundamentally a step in the wrong direction. I personally use one, maybe two cards, so I rarely carry a wallet. I believe we should be moving away from cards altogether. I think google wallet, square, and other RFID/NFC technologies are thinking about the future, where our devices are consolidated and integrated with the world around us. Bitcoin, a virtual currency, proves the success of something that exists purely in the aether, and keeping a Bitcoin wallet on your phone is easy. The problem with these technologies is vendor adoption. It’s not here yet, but it’s on the way.

How I would solve the problem of keeping more than one card wouldn’t be on the client side, but rather on the server side. Let me explain. I should use a plastic card, cheap, easily replaceable, low cost (free in most cases), and my card account should buffer my purchase as long as the combined total of credit/cash in my accounts is greater than or equal to my purchase. I should then be able to place either the entirety of my purchase or parts of my purchase in separate accounts that provide different benefits. (Think, business, flight mileage, cash back rewards, etc) The service should often be smart enough to learn where I move my purchase and do so automatically if I so choose.

Legality of preordering

Techendo friend aclimatt (Matt Hubert) pointed out this in Coin’s Q&A:

Q. Why are you charging me immediately for my pre-order?

A. Creating and manufacturing new devices is expensive. As a young company, being able to use the revenue from your pre-order to pay for things as we build them helps us reduce risk and helps ensure that we deliver the best possible product and customer service to you.

This site has some things to say about this practice:

"In general, debit card transactions are governed by the Electronic Funds Transfer Act (EFTA), which does not require debit card issuers to wait until a product has shipped prior to authorizing a transaction from your account. That being said, your debit card provider may have a policy prohibiting the merchant from charging your account before shipment. For example, Visa requires that merchants ship a product prior to charging any Visa debit card. Since you used a debit card to pay for the merchandise, contact the card-issuer to find out about company policies."

"However, if your order is not delivered, you are guaranteed a refund under the Federal Trade Commission’s Mail or Telephone Order Merchandise Rule, which requires that your order be shipped within the time stated in company advertising or by phone. If no specific time is promised, your order must be shipped within 30 days from the merchant’s receiving a "properly completed order" with your name, address and payment by check, money order or authorization to charge an existing credit account. If the order is not shipped within the promised time, the merchant must notify you of the revised shipping date and give you the option to cancel for a full refund or accept the new shipping date. Since you paid by debit card (this would also apply to cash, check or money order), your refund must be mailed within seven business days. For future reference, had you made the purchase with a credit card, the merchant would be required to credit your account within one billing cycle.

If you are unable to resolve this issue, please contact the Governor’s Office of Consumer Protection or the Federal Trade Commission (FTC)." [1]

Conclusion

The demo video is slick [2], and while I do appreciate people trying something new, I personally wouldn't own this. It's just too gimmicky and user pr0zac said quite eloquently,

If your product doesn't remove failure points its not going to work; if it increases failure points its definitely not going to work.

Definitely a "startup truism."

Coin is funded by YCombinator, and K9 Ventures. Coin is founded by Kanishk Parashar

[1] http://www.consumered.com/answers/post/Can-a-company-charge-my-debit-card-before-shipping-an-item.aspx

[2] http://www.youtube.com/watch?v=w9Sx34swEG0

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