Score One for 2G Cards
News today that Citigroup will introduce arguably the first 2G credit card, which comes with a pay-with-rewards button, is a massive win for Dynamics Inc. With the Citi deal, the three-year old startup that has raised $5.7 million has positioned itself as “the innovation arm of an industry that has never had one,” in the words of Jeffrey D. Mullen, the company’s CEO.
A quick glance on the company’s skunkworks projects validates Mullen’s claim:
- A card that would allow cardholders to have multiple accounts on one card, like a corporate and personal card; and
- A card that reduces fraud associated with “skimming,” by automatically writing a new, unique security code onto its magnetic stripe for every in-store purchase. According to Dynamics, a display can also be added to the card for a new, unique security code for every online purchase.
There is good and bad in the fact that Citi is Dynamics’s pilot client. Citi is essentially buying innovation with this new Dynamics product. Arguably, The New York Times article about the deal on the front page of the Business section today was worth whatever the bank paid Dynamics. But Citi is still a massive bank, and a client like that looks good on paper for Dynamics. The “innovation arm” has found its sugar daddy.
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