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Testing out Loop’s programmable credit card

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Boston payments startup Loop on Wednesday has released its interesting take on the digital wallet to consumers, selling a programmable fob and a charge case on its website and launching its payments app in the iTunes App Store.

Loop’s technology is similar to that of Coin, which has been attracting a lot more attention to its forthcoming universal credit card. Both technologies offer hardware that will emulate the magnetic strip on any credit, debit or loyalty card. The main difference is that Coin has built what amounts to an electronic card you can swipe at any terminal, while Loop’s fob is contactless, generating a magnetic field that any point-of-sale terminal can read when within a few inches.

Loop Fobs

I had the chance to test out Loop’s $39 fob this week. The fob, about the size of a box of Tic Tacs, plugged into my iPhone(s aapl) — Loop says an Android(s goog) app is in development –through the audio jack where it connects to Loop’s credit card management app. You enter your card data through the fob’s magnetic reader, and from there you add security data and then select the level of access for each payment method. The fob can be locked to a specific phone so no one else can access it if lost or stolen.

The Fob doesn’t need to be attached to the phone the work, but it will need to be connected to the phone for you to select the card you want to use. You can also give the fob a time limit on which to handle a transaction before it goes inactive. For instance, you can set it for 10 minutes if you want to hand it to a waiter to pay a restaurant bill, or for a day if you want to give it to your son to take along on a school field trip. Or you can select no limit at all. Once the time limit is up, the fob will stop working until it’s plugged back into its paired phone.

Where I used Loop, the experience was surprisingly seamless. When you’re ready to pay you press a button on the fob and then tap or wave the device near the magnetic strip reader on the point-of-sale terminal. The terminal behaves exactly as if you swiped plastic.

Loop Fob payments terminal

I originally thought the biggest obstacle I would face wouldn’t be a technology limitation but the reaction of merchants. After all, I was waving some strange gadget in front of their check-out stands, and my credit card data would  magically appear. But so far that hasn’t proved the case. At Trader Joe’s I paid for a $50 grocery bill with Loop, fully expecting to be stopped or asked to present my physical debit card. The check-out clerk’s reaction was simply: “Cool.”

I found it a bit annoying that there was no connection between my phone and the fob unless they are physically linked. That means to switch between cards I have loaded in the fob, I have to plug it into my phone’s audio jack, open the app, enter my PIN, select the card I want to use and then unplug. In my mind, it’s just easier to go into my wallet and pull out the physical plastic.

But I definitely see the appeal of reducing the clutter in my wallet and pockets, and judging by the enormous interest more tech-savvy consumers are taking in Coin, a lot of people see that appeal as well. The advantage of Loop and Coin’s technology is they don’t require building payments networks or any near-field communications (NFC) chip in the phone like Isis or Google Wallet. It just works at any payments terminal that will swipe a cards; at least until the U.S. moves over to the chip and PIN transaction technology now standard in Europe.

12 Responses to “Testing out Loop’s programmable credit card”

  1. Anthony Decena

    Other than not being able to easily switch between payment methods, which is pretty much a deal breaker in my mind, the thickness of the device doesn’t seem to be saving much space. It looks like it might be the same thickness as stacking 6-8 cards on top of each other. If this thing were flat like a door fob, then I could see myself using it.

  2. futurepay

    @klickster there will be different form factors of Loop coming. In fact the Loop technology can be embedded into different smart devices including your phone. Future Loop version will support to toggle between different cards as well as change your cards from the mobile app via BLE.
    Regarding your security concern: The magnetic signal is just strong enough to be read by the card reader when held closely next to it and the signal only lasts for a few ms.

    • futurepay

      Enforcing this tight deadline on all merchants will be a tall order due to cost and business disruption. Loop works with the current systems, and is not exclusive of future technologies. There will always be changes in technology, but working with he current mag stripe infrastructure just accelerates the adoption of mobile wallets.

    • Jennifer Ni

      Hi, thank you for brining this up. We actually reached out to Tom Gara from WSJ and demoed our product to Tom. He is intrigued by our patented technology and will have a follow-up after using the Fob a few weeks.

      Back to EMV question, EMV was created 30 years ago to enhance security for off-line payments. Due to cost reason, US has been slow adopting EMV. EMV technology has taken more than two decades to be adopted in other markets. Billions more have to be spent to migrate the rest of the world to EMV. Partnering issuers, Loop’s technology can dynamically issue data for each payment, leveraging existing magnetic stripe readers, and Loop’s ability to build additional layers of security to enhance security that is as good as or better than EMV on mobile devices, Loop is a real alternative with a more convenient and more secure solution for the payment industry, and zero costs to merchants.

      • Robert Martin

        i think this is a very important point. People keep forgetting that the reason EMV is standard in europe is because their wired telecom systems were not as well developed as those in the United States. EMV allows merchants to run transactions offline without contacting the merchant electronically. This is actually the ONLY time an EMV transaction holds an advantage over a connected mag stripe one.

        In the US nearly 100% of credit card transactions are run in online mode. This means that at the time of the transaction the CC issuer is contacted and the account information is verified and the transaction is directly authorized. This is why in the US we are able to stop CC fraud so quickly. A person will be lucky to get 30 minutes of use out of a stolen card before it is deactivated and made worthless. In europe this isn’t the case as a large amount of transactions are run in offline mode. The approval is actually locally authorized so as long as you have the correct pin for the card the transactions will continue to run until the cards expiration date.

        EMV is technology the US does not need. What we need is a mobile payment solution that actually works.

    • jramageky

      Merchants will still be able to use the current swipe-and-sign technology after the transition. Scroll down in the linked article to the question about “liability shift.” After the transition, it will be the merchant who is liable for fraud if they haven’t upgraded. This will make the stragglers more vigilant in checking photo IDs, signatures, etc.

    • Agreed – like Europe, Canada is almost entirely chip and pin.

      I’d love something like this but I would be concerned about security of these devices.

      My buddy has an app on his android phone that can read the card number from a credit card with a chip if it’s close enough. Not a real concern but it does show what is actually possible. Look at what’s happening in the world of bit coin too.

      I’m not sure it’s possible to make a secure technology for payments like the one in this article.

    • Just because Visa and Mastercard are mandating a switch by Oct 2015 doesn’t mean that date will be hit. Read this article for the reality of the fact that 23 million small merchants making up 54% of transaction volume in the US will not hit that deadline:

      Even Visa acknowledges that that magstripe will be around for a long, long time…

      Q5: Is there a plan to eliminate the magnetic-stripe in the long run?
      There are no specific plans to eliminate magnetic-stripe. Global chip migration will continue to be gradual, and
      until we reach ubiquity, the magnetic-stripe on the back of the card will continue to provide global acceptance
      Q6: What happens if a merchant has a chip terminal and the card’s chip cannot be read?
      The merchant will process a “fallback” transaction using the card’s magnetic-stripe. The liability shift will not apply
      to the merchant as long as the transaction is properly flagged as a “fallback” transaction.

  3. This is a total fail for me since can’t switch dynamically – will investigate coin based on this review. If v2.0 comes with an extra button that can toggle my card, then great. I do like that you don’t have to swipe but just need to get near it. I don’t like that this same tech can probably be hacked by someone standing nearby with some spy gadget :(

    Coin seems to be best.

    • Jennifer Ni

      Hi, I am Jennifer Ni, Loop Marketing. Just wanted to let you know we do plan to have more more form factors. Currently, the Fob can only be used to pay with designate card. In the future, we will consider have a few often used the cards to be accessed more easily. For security, please visit our website FAQ.