Why Coin is a real threat to existing mobile payments systems

The startup Coin came out of the shadows this morning to outline an eponymous device aimed at replacing all the credit, debit and loyalty cards most of us tote around every day. The credit card-sized gadget — which won’t come to market until next summer — uses Bluetooth low energy (BLE) to sync with smartphones or tablets, where users can store their existing accounts by swiping cards through a connected dongle. Users can switch between accounts with the press of a button, and Coin works with any conventional credit card reader or ATM.

Replacing physical credit cards and cash has proved a difficult proposition for new payments systems (particularly mobile wallet efforts), and Coin is sure to face some headwinds as well. The $100 price tag ($50 for those who participate in the crowdfunding effort that launched today) will be a tough sell for some users who have grown accustomed to carrying multiple cards, and some may balk at the thought of loading their financial information onto their phones.

But Coin will certainly feel more familiar than mobile payments systems using NFC, BLE or QR codes to perform transactions at the point of sale, and the fact that it works with existing infrastructures eliminates the need for retailers to invest in new equipment. And because Coin is a simple hardware business, it doesn’t require the complex business models that are essential for any mobile payments system that rewards both retailers and consumers (which any successful mobile payments scheme must deliver). If Coin proves compelling to consumers, initiatives like Google Wallet, PayPal mobile and the carrier-backed ISIS (which went nationwide today) will find it even tougher to gain traction in an already difficult market.