August 19, 2016
Escardgot: Leading the Charge for Universal Cards
By D.J. Murphy, Editor-in-Chief, CardNotPresent.com
As mobile wallets continue to evolve—and as what were formerly considered breakthrough technologies fail to gain traction as quickly as hoped—pundits and opinion makers are beginning to ask, “what consumer problem do they really solve?”. For everyone who believes it just isn’t that hard to pull a card out of a real wallet, a new movement has begun to take shape: the introduction of universal cards. The cards combine a form factor with which consumers are incredibly comfortable and the ability to access several payment methods and/or loyalty cards in one device.
A company called Coin made a big marketing splash in November with its version of this technology, but several companies—including a small startup based in Sacramento, Calif. called Escardgot—had already identified the potential of the product and could be closer to market than Coin (despite a successful presale of its cards that raised $50,000 in 40 minutes , according to reports).
The various competitors in the universal-card category differ in many ways, but the devices share several characteristics: they are the size and shape of a traditional payment card; payment card, loyalty card and other data can be entered and stored using a smartphone app that communicates with the card using Bluetooth; they can access all types of payment and loyalty cards at the point of sale; and they can be swiped through a retailer’s existing POS system like a traditional mag stripe card.
Tom Humphrey, the founder and president of Escardgot and inventor of the company’s Helix card and the Helix mobile app, sees the product not only as a bridge between card payments and mobile payments at the POS, but also one that will survive the transition to a time when mobile payments become the norm.
‘The Perfect Transitional Solution’
Humphrey began thinking about the mobile payments conundrum in the waning years of the last decade and, as he saw it then—even before the hype surrounding NFC existed—there was potential for a payment product that could carry all the card data existing in the average person’s wallet and work with the legacy payment system so entrenched in the U.S. Even as NFC emerged and migration to EMV began to gain momentum, he realized mag stripe, in some form, will remain for a long time.
“Since I started thinking about this more than three years ago, things like Google Wallet and hype around EMV have captured all the headlines,” Humphrey says. “But I realized, in the U.S. market, there’s no way the change is going to happen overnight. It’s a 10-year process. I started looking at the EMV mandates in the U.S. It’s not going to happen as quickly as the networks’ road maps indicate. And, there are a ton of other cards you carry that EMV won’t ever affect. Look at loyalty cards. Look at Square. Mag stripe readers are not going away in the U.S.”
Humphrey says the potential of his initial concept of a universal card was confirmed when he saw the frustration mobile wallet solutions were experiencing in trying to work with the networks, banks, carriers, merchants and consumers. Mobile payments would not kill his idea. In fact, he thinks the trouble they are experiencing gives Escardgot a window of time in which the Helix card is the “perfect” product.
“When I saw the frustration that Google Wallet is experiencing, 800-pound gorilla that they are, with the credit card companies, it reiterated to me that I have the perfect transitional solution,” he says. “With the companion app, Helix gets consumers thinking about using their mobile phone in a brick-and-mortar environment. And, if the tech does change in the next year or two, all the better because the consumer can have both options on their phone.”
Better than the Competition?
There are at least three companies competing with Escardgot to make it to market with a universal card. All are in various stages of development. The most well-known, thanks to a full-court press marketing blitz in December, is Coin. Articles in national publications and a professional Youtube video led to a very successful Kickstarter-type funding campaign enabling Coin to raise capital quickly.
Along with its initial hype, however, Coin began to experience the “flip side of the coin” quickly. The crowdfunding campaign—a presale for Coin cards that will not be available until this summer at the earliest—was successful at selling the cards for $55, but will consumers still want to purchase cards when the price elevates to its regular $105? Press reports also began to focus on Coin’s battery. The battery is not rechargeable and the company admits it will last only two years.
Humphrey believes his product is better: First, it features a rechargeable battery so consumers will not be required to buy a new card in two years. Also, Humphrey says most of his competitors are using Bluetooth low energy (BLE) to communicate between the card and the phone. He believes this is because the BLE components fit the credit-card form factor that makes universal cards so comfortable and familiar for consumers to use. Escardgot has sourced a dual-mode chip thin enough to deliver both BLE and classic Bluetooth communication between phone and card and secured a patent on the manufacturing process. Humphrey claims this is important because so many Android devices still do not have BLE capability.
Most importantly, perhaps, is Escardgot’s revenue model. While Humphrey says he needs to sell the card initially, his eventual plan is to offer the card and app to consumers for free and charge merchants to offer coupons and promotions.
“We’ll have a merchant portal where merchants can sign up and download offers to our app holders based on search terms or geographical location of the phone and various other demographics,” he explains. “We think we’ll do that for 10 cents a coupon and we won’t charge for a coupon that’s not used. Since we know where a person is when they’re making a purchase and we know what their preferences are (they have to opt in), we’ll know what offers to deliver.”
Potentially, Humphrey envisions the Helix card and the Helix app as a delivery mechanism for payment methods other than traditional credit, debit and loyalty cards. He says Escardgot’s universal card could enable issuing banks to provide one-time virtual credit-card numbers (which some already offer their customers for online purchases) for use in a brick-and-mortar environment. The security ramifications of this could be significant, Humphrey adds.
“If anyone steals that, it’s useless,” he explains. “It’s one time for a specific amount at a specific merchant with an expiration date. The virtual card paradigm doesn’t work for physical plastic cards because the number is static. But we can bridge that gap with the Helix card.”
A universal card, he notes, makes virtual cards of all kinds a reality that could potentially save merchants and card issuers millions if they no longer have to produce as many plastic credit cards and gift cards.
Escardgot also is working on a feature that will enable users to pay at physical locations with Bitcoin. Consumers enter their Bitcoin information into the mobile app, the exchange from Bitcoin to U.S. dollars in performed by Escardgot’s servers and the company delivers a virtual, open-loop gift card to the user’s Helix card to swipe at the store.
Preparing the Beta Test Track
Escardgot first unveiled their concept and a demo card at the FinnovateSpring convention in San Francisco in May of last year. Currently, Humphrey says there is a completely finished alpha card and the company plans to have 1,000 cards ready to beta test by the end of the first quarter.
Humphrey continues to look for funding sources that could radically accelerate the company’s road map. At the moment, there is plenty to work on, but he feels the prototype he has already produced and that demonstrably works puts him at the head of the universal-card pack. And, when unveiled for the public at large, he thinks they will have the same reaction he does.
“When I hold it in my hand,” he says, “it makes me smile.”