Why wouldn't a VC back this and subsidize their business model until they could get critical mass, then sell to retailers and create the first real competitor for the major card companies.
Conversely, if I were MasterCard or visa I would bar merchants from taking this card for my transactions to maintain competitive advantage.
Atually, I wouldn't be surprised if the currently existing rules would already bar merchants from taking such a card - technically, this is a cloned card that is not issued by a member of MC or VISA; and there are security rules/training for identifying cloned (blank) cards and refusing/detaining them as fraudulent.
Yeah, actually after I made the comment I realize that that issue of acceptance is probably the reason they are selling this on kickstarter instead of a VC backing it. It may have been identified as a risk during YC and now they are still trying to make it work.
I hope the founder comments on this point. If it is usable and merchant contracts are in place for long enough, this is really cool. If there is a whole in the legal side, this feels like something that may not be ideal to back on kickstarter.
Coin apparently aren't a MC/Visa issuer, so they can't claim to issue a valid card or mobile payment device. In addition, merchants are supposed to judge cards by the system logo - and Coin can't have MC or Visa logo if they aren't an issuer, and certainly no card is allowed to have both MC and Visa logo (even if they would technically support both), MC/Visa prohibit that.
On an anecdotal basis, the recommendation given to cashiers when teaching them how to handle cards and detect fraud is not really in-depth but more or less "if you see something suspicious that is not a normal card, call the cops", or something like that.
Conversely, if I were MasterCard or visa I would bar merchants from taking this card for my transactions to maintain competitive advantage.