Coin, the digital credit card startup, has 3 big problems

Google said all major credit cards had signed on, but American Express (. Coin has set lofty goals in attempting to tackle the payments industry. Coin's splashy launch generated a lot of attention, but there are several big issues that need to be resolved if it's going to be a successful product.

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Coin won't work if your phone is dead: Yup. Related story: How to successfully launch a second startup. Echo website still lists the product as "Coming Soon!". "And anyone who works on the merchant side is also a consumer anyway.". If major credit cards see Coin as a liability or ripe for fraud - after all, the actual issued card isn't being presented - Coin would be sunk.

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Or if your phone's battery has run out. The current iteration of Coin "locks up" if it's away from your smartphone for more than 10 minutes.

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The product already encrypts credit card information, he said, and Coin is working on "two more features to curb the possibility of fraudulent activity." Visa (. Merchants swipe Coin just as they would a regular card.

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Coin is a buzzy new startup that's making a digital credit card that stores information for all the other cards in your wallet. V MasterCard mA AmEx and Discover dFS ) either declined to comment about Coin or didn't reply to requests.

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The company - which is backed by investors including Y Combinator and K9 Ventures - has been testing working prototypes of Coin and is "two iterations away" from being ready to manufacture, Parashar said. There's already a similar "all-in-one" card called the Protean Echo that got some tech-press love in August 2012. Credit card companies might nix it: Coin hasn't secured approval with any of the major credit card issuers and networks it hopes to work with, nor has the company gotten a sense of whether the industry would embrace.

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"We don't plan to go out of our way to educate the merchant world about it, because we're focused on the consumer side Parashar said. "We're a really small company, and these are really large banks Parashar said. (Your phone will even send you a notification if you do leave your Coin behind at a bar.) But having to depend on battery-guzzling smartphones in order to pay for dinner is an obvious problem. Cnnmoney (New York) First published November 17, 2013: 11:14.