NFC or no NFC, Loop enables you to accept and make cashless payments

Currently in USA, companies like Google, MasterCard, ISIS, etc. are working on building an NFC enabled ecosystem. Device makers in the USA have started making NFC enabled phones. Merchants are finding it tough to pay for NFC enabled readers as they have high acquisition costs. Loop, a Boston based startup claim to have found a solution to the NFC problem that is affecting consumers and merchants.

On 8th October 2013, Loop announced the introduction of a new payment enabling technology. Which consists of a smartphone app using magnetic field technology to enable customers to make payments in-store. Loop is led by mobile commerce pioneer Will Graylin and George Wallner (CEO Hypercom).

Loop offers two products:

Loop Fob:

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:

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.

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. 'This is in contrast to NFC, where you have to go to a bank and have cards downloaded,' says George Wallner, Chief Technology Officer at Loop. 'NFC's so complicated that it hasn't taken off.'

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 has also filed patents to include magnetic transmission of card data signals from a distance (around 40mm) to a standard POS card reader.

The initial cost of the Loop Fob is $34 and Loop ChargeCase is $99. Beyond this, there is no additional fees for the Loop Wallet. The company does not charge a fee per transaction or recurring cost.

The Loop ChargeChase and Fob devices come with a USB cable for charging. The LoopWallet iOS app will be available for download by December this year. Android app will be ready by Q1 of 2014, according to Loop. The company also claims to be testing 100 Prototypes of the Loop Fob and ChargeChase.

Loop gives consumers control of their mobile wallets, They can load credit, debit, gift, membership and loyalty cards into a Fob or ChargeCase. They can also store identification cards, membership cards, receipts and passwords says Wallner.

However, there are some concerns that Loop does not address. The LoopWallet app for this case is built to be safe, but it does raise the question of what happens if a customer’s phone is stolen. Does the customer need to cancel all his cards? The need to connect and disconnect a Fob is alright for merchant swiping credit cards, consumers however may find it cumbersome.

LTP View: Loop’s model may be able to leverage an existing transmission means to add better security without huge costs at the merchants’ end. Non NFC independence for merchants to accept payments through Loop may work in its favor. Loop’s application however does not support identity verification outside the U.S. This limits Loop’s reach to customers and merchants in US unlike its competition.