> loss of branding on their cards and the additional fraud risk
Loss of branding is a fair point, but I think this would reduce fraud risk. Automatically deactivating itself when lost or stolen more than makes up for the risk of trusting Plastc.
Possibly although the attack surface of this kind of solution is quite a bit bigger than that of a traditional card. Introducing complications like smartphone apps and increased complexity of programming on the card itself, has quite a bit higher potential for exploitable bugs compared to a traditional Chip & PIN card.
Loss of branding is a fair point, but I think this would reduce fraud risk. Automatically deactivating itself when lost or stolen more than makes up for the risk of trusting Plastc.