Payment Methods

Coin On The Hot Seat Over ‘Defective Product’

Coin Inc. is facing a lawsuit about its promise that consumers could (and should) carry a single card rather than several cards, according to a Monday (Feb. 8) report from Digital Transactions. Those claims were made by the company in tandem with the implication that the single card would be accepted virtually anywhere.

[bctt tweet=”Coin Inc. is facing a lawsuit about its promise that consumers could (and should) carry a single card rather than several cards.”]

The site said the suit had been filed in San Francisco on behalf of two consumers who had each bought and used the Coin device; they allege that the company misrepresented just how widespread merchant acceptance of Coin would be. The Coin device works on the premise that all payment cards can be carried in a single “card-like device” — holding up to eight debit, credit or gift cards, or a combination thereof. The only catch is that the cards have a magnetic stripe. The user chooses which card to use by pushing a button. The display shows only a limited amount of data but enough that the card can then be swiped. The company unveiled its latest iteration, with near-field communication technology embedded, in August, thus enabling contactless payments.

And yet, according to the complaint, the Coin device showed a failure when used at point-of-sale terminals as much as 15 percent to 40 percent of the time. In terms of technology, the device, said the suit, only stored and transmitted data that is classified as track 2, which may not sync with the data used by the terminals themselves. And Coin itself, said Digital Transactions, states on its website that roughly 85 percent of merchants need track 2 data only when it comes to processing transactions and also says merchants should contact processors in order to jettison the track 1 requirement.

In addition, the suit says an online video, pushed by Coin along with a crowdfunding campaign, said the devices would be available in 2014, but the launch actually took place in April of last year.

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The pressure on banks to modernize their payments capabilities to support initiatives such as ISO 20022 and instant/real time payments has been exacerbated by the emergence of COVID-19 and the compelling need to quickly scale operations due to the rapid growth of contactless payments, and subsequent increase in digitization. Given this new normal, the need for agility and optimization across the payments processing value chain is imperative.

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