The Risks & Rewards of a New Credit Gadget: Coin

Credit.com

The new credit card consolidation device Coin has a lot to offer consumers who carry loads of plastic — like convenience, lighter wallets and security features.

Coin is designed to look and function like many of the plastic cards we carry everyday, but it collects the information on all those cards so a Coin is all a consumer needs to carry, along with a smartphone. Cards are added to a Coin by using the Coin app, taking pictures of a card and swiping the card through a device that attaches to smartphones.

The smartphone-Coin relationship is crucial to the device’s functionality, as the card cannot be used without Bluetooth connection to the phone. It’s part of the security structure: The Coin will deactivate if it loses connection with a smartphone, either due to physical distance or loss of power, though Coin’s website does not specify how long the card will function without smartphone contact. It just says “a period of time that you configure in the Coin mobile app.” The information stored on the device and in the application is also encrypted.

“Since the Coin device isn’t on the market, it’s hard to do more than speculate about the effectiveness of their security protocols at this stage,” said Adam Levin, chairman of Identity Theft 911 and co-founder and chairman of Credit.com. “That said, I am concerned that the product could make it even easier for thieves to gain access to people’s financial information, since thieves could steal a Coin user’s phone and device and use it to make purchases on whatever cards people have loaded onto it.”

The app can hold an unlimited number of gift cards, credit cards, debit cards, loyalty cards and membership cards, but the physical Coin can only hold up to eight cards at once.

A Coin will cost $100, but consumers can pre-order it for $50 through Dec. 13, and the device starts shipping in summer 2014.

Since Coin isn’t yet in action, it’s hard to analyze just how convenient and secure the device will be, but here are few things to think about.

Coin Relies on Smartphones

The creators addressed a security concern by dictating the Coin-smartphone relationship: If someone steals your Coin, therefore distancing it from the smartphone, it will shut down after a while. It’s unclear how quickly the card locks up, but it’s potentially more secure than if a thief steals a real credit card, which can be used until it’s reported stolen.

But if a Coin-connected smartphone loses power, you run the risk of being phone-less and card-less. While the Coin website bills the card as a standalone device, meaning users do not have to have their smartphones with them to use a Coin, the site also says the phone is needed to take advantage of some security features, like alerts telling the user the Coin has potentially been misplaced.

Weighing Cost & Convenience

Depending on the consumer, paying $50 or $100 for a Coin may be cost-prohibitive or a steal. Its worth is up to the individual. It’s especially important to note that Coins won’t ship for another several months, meaning that $50 is tied up without benefit for that time. According to the website, a Coin is designed to last for two years and would need to be replaced after that.

For someone with a lot of cards to carry and a distaste for thick wallets, the device could make life a lot easier. A few things on convenience: Even with conventional credit cards, it’s smart to carry a backup, and a Coin can only hold eight cards at once. Changing the cards requires some planning and using the smartphone app, which is available for iOS and Android.

There are a lot of questions to be answered about Coin — the FAQ section on the site is pretty informative — but it will be interesting to see how consumers adopt the device as it becomes available.


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