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Fascinating new mobile payment solution works almost everywhere by tricking credit card terminals

Updated Feb 19th, 2014 11:58AM EST
Loop Mobile Payments

The battle for the future of digital wallets is still in its infancy and there are still no clear winners in the United States. What is clear, however, is that NFC-based solutions haven’t seen the widespread adoption some industry watchers had expected. The lack of a universal solution and the cost of upgrading merchant terminals are both huge barriers, and they may never really be overcome. As such, several companies are looking for ways around these limitations by coming up with solutions that work with current equipment. One example we covered recently is Coin, which is building a one card to rule them all solution. Now, another contender called Loop has released a novel product it hopes will change the way we pay for goods and services.

Loop on Wednesday announced its new LoopWallet app for the iPhone, which serves as a companion to two physical mobile payment solutions the company plans to offer. The first is a small payment fob that is available for purchase immediately, and the second is an iPhone case that will debut in April.

The “Loop Fob” and LoopWallet app allow users to load all of their credit cards, debit cards and swipable membership cards into a single device capable of storing them all and switching between them on the fly.

Here’s where things get interesting.

The Loop Fob works with almost all current point of sale (POS) terminals, but it does not have a swipable component like Coin’s solution does. Instead, the device uses Loop’s patented Magnetic Secure Transmission technology to send out a burst of data that tricks POS terminals into thinking a card has been swiped. The fob passes along the same card data that swiping a standard card would, but users can now carry a single device to replace almost every card in their wallets.

Loop’s fob includes a card reader that is exposed when the device is removed from its rubber housing. The fob plugs into an iPhone’s audio jack and the accompanying app walks the user through the simple process of adding new cards. Then, the app acts as a mechanism to select which card the user wants to pay with.

To pay, the user simply holds the fob above the area on a POS terminal where one would normally swipe a card, and then taps the button on the side of the fob. Data is transmitted to the terminal instantly.

The video below demonstrates how the device works.

I have spent some time testing the Loop Fob and LoopWallet, and it’s definitely an interesting and intriguing solution.

According to Loop’s marketing boss Jennifer Ni, Loop’s payment solution works in tens of millions of locations around the world. In fact, Ni says that Loop will work with about 90% of existing POS terminals with no modifications. She says there are still some old PC-based payment systems with old software that aren’t compatible with Loop’s devices, however.

In terms of security, all data stored on the Loop Fob, in the PIN-protected LoopWallet app and on Loop’s servers is fully encrypted. And the Loop Fob itself can be configured in such a way that it’s completely unusable if lost or stolen.

When setting up the fob, there are three different options for how cards can be used. Those unconcerned with security who want to use the fob like a normal credit card can configure it to always work with their default credit card. This means that when paying for things, a user won’t have to connect the device to a phone at all. If the device is lost or stolen, it will be usable (just like a lost credit card) until the configured payment account is deactivated by a bank.

Then there are two timer options that allow the fob to be used with the selected payment method only for a certain amount of time once the fob is disconnected from the phone. The fob can be set to work for 10 minutes, which is perfect when paying for dinner at a restaurant, or for 8 hours, which is good for a full day of shopping without having to reconnect the device to your phone.

Finally, the Loop Fob can be set to only work while it is connected to the user’s phone.

“Loop users are making history as they embark on an exciting new era of secure smartphone-enabled payments,” Loop CEO Will Graylin said. “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. It’s a true breakthrough that brings more convenience to consumers and with a new level of security beyond chip cards.”

Using Loop is an interesting experience, and there is one obvious drawback: this is very new technology so each and every time you use the device, you have to explain how it works to the cashier. It’s annoying, but it’s up to the user to decide if it is more or less annoying than carrying around a wallet full of a dozen different cards.

The Loop Fob is available beginning Wednesday for $39, and it can be purchased on Loop’s website. The LoopWallet companion app is a free download from Apple’s App Store and an Android version should launch in April.

Zach Epstein
Zach Epstein Executive Editor

Zach Epstein has been the Executive Editor at BGR for more than 10 years. He manages BGR’s editorial team and ensures that best practices are adhered to. He also oversees the Ecommerce team and directs the daily flow of all content. Zach first joined BGR in 2007 as a Staff Writer covering business, technology, and entertainment.

His work has been quoted by countless top news organizations, and he was recently named one of the world's top 10 “power mobile influencers” by Forbes. Prior to BGR, Zach worked as an executive in marketing and business development with two private telcos.