In October 2013, Loop had announced the introduction of a new payment enabling technology. It tricks the POS card slot into believing somebody is actually swiping a card. Its called Magnetic Transmission Technology (MST). It consists of a smartphone app and a fob/chargecase that uses magnetic field technology to enable customers to make payments in-store. On 20th February, 2014 the company publicly launched its Loop Wallet iOS Application in the U.S.
Go Ahead and download the application and buy a fob and leave your cards back at your house. Wherever you go just use the Loop at the restaurants and retailers. We did the same and noticed how amazed the sales folks behind the POS were.
Loop is led by Will Graylin (CEO) who had previously founded WAY Systems and ROAM Data, and George Wallner (Formerly, CEO of Hypercom). The company closed a $10-$12 Mn Series A funding from undisclosed investors in December 2013, which includes “many high-powered CEOs, including people from the payment industry” according to Graylin.
The following video gives you an overview of their platform:
The Loop Fob device and LoopWallet app enable users to load all debit, credit and membership cards into a single device that is capable of storing them all and switching between them on the go. One of our Senior Columnists went and met with the team recently and wrote about the developments.
Loop offers two products:
This is similar to Square’s device except that it can also be detached and used to make payments. It consists of a small audio jack device with a built in card reader to store the user’s cards encrypted into a secure memory module. A microprocessor and magnetic induction loop within the Fob is said to enable the user to transmit user’s card data to any merchant card reader. iOS and Android devices are compatible with the Loop Fob. The company says that Fob can transmit a user’s card data while attached to his phone. The device can also be used at bars or restaurants in detached mode.
Loop ChargeCase ($99 – To be released by April 30th, 2014):
As a mode of payment, NFC has been having a hard time. Loop however makes use of magnetic induction to transmit data to a card reader. The ChargeCase boasts to be a protective case that delivers up to 60% more battery power for users than the iPhone 5s. An audio jack mag stripe reader is equipped with the ChargeCase. This enables the user to swipe all his magnetic stripe cards into the loop device. The ChargeCase works with 90% of the credit card readers according to company but not at ATMs or gasoline pumps. We saw some of the prototypes of the future ChargeCases that are going to be launched by Loop and they are much thinner and lighter.
Users can swipe all of their cards stored on a secure chip in the ChargeCase with an audio jack reader provided by the company. They can also utilize the Fob with its integrated card reader for the same purpose. According to Loop, the device works within 4 inches of the read head. Beyond that, the field dissipates quickly. Only when the user initiates a transmission, the device generates a magnetic field.
“Loop users are making history as they embark on an exciting new era of secure smartphone-enabled payments. Loop gives users an intuitive way to simplify and organize their wallets. Just download the free LoopWallet app, order a Loop AppCessory, swipe your cards into your smartphone, and pay at almost everywhere in the world,” said Graylin. “It’s a true breakthrough that brings more convenience to consumers and with a new level of security beyond chip cards,” he added.
Loop isn’t the only digital wallet that boasts widespread compatibility and is based on the principle of dynamic mag stripe. Omne and Coin are some of the other companies operating in a similar space. Omne was founded in June 2012 and is led by Daniel Auten (CEO) and Jordan Goldman (President). Omne’s solution allows consumers to access their wallet from their smart phone, and execute an in-store payment by swiping their Universal Omne card on a standard credit card terminal. Omne uses a unique technology that allows the magnetic stripe on the back of the Omne card to change into any verified card loaded by the user onto the Omne Mobile Wallet App. All of these solutions have limited when you go to ATMs and Metrocard machines because they will not work in situations where you have to dip the card.
Loop is slightly different, in which it still provides the ability to not carry the credit/debit cards but it a contactless format unlike Coin and Omne card which are swipe-based. Its an important point because Loop can provide more security and prevention from fraud, if the tokenization feature is utilized during payments. Loop already has the capability to enable token based payments. We have learned that there is a possibility that this solution (which is a small loop of wire) will get integrated into the phone (inside the phone circuitry) and so there won’t be any need to carry anything else, for mobile commerce. It will happen depending upon the interest from the mobile device players and telecom operators and will take time. On the lighter side somebody noted that a thief might not be able to identify it as something that holds money and would not be interested in it.