The company, for background, is headed up by payments industry vets, including co-founder and CEO Will Graylin, who previously founded WAY Systems (sold to VeriFone) and ROAM Data (sold to Ingenico), and co-founder and chief technologist, George Wallner, who previously founded Hypercom, also sold to VeriFone.
Their idea? To work around the U.S.’s so far slow uptake on competing mobile payment technologies including PayPal, Google Wallet, Square, Isis and others, with a solution that utilizes either a smartphone fob or card case to “trick” point-of-sale terminals into thinking a credit card has been swiped, without you having to actually carry the card or remove it from your wallet. Loop does this via an engineered technology that induces a strong enough magnetic signal to emulate the card swipe, which the company calls “Magnetic Secure Transmission,” or MST for short.
Currently, only the Loop Fob is available for purchase ($39), but other devices including a smartphone case and smartphone charge case are in the works. These and other so-called “AppCessories,” will let users load and store all their payment cards, including credit, debit, gift cards and reward cards, within the iPhone application.
To facilitate the process of adding your payment cards and managing them on your phone, the new LoopWallet application walks you through a setup process where you can organize your cards in a simple interface.
Though I’ve had early access to the app for some time, I’ve personally encountered a few difficulties with the hardware (thanks to being shipped a wrongly programmed device in error) and issues with my account. Technical difficulties like these are common with early stage startups, so it’s too soon to write off Loop as being buggy. However, further (successful) testing is required before forming an opinion which I’d share publicly here.
One thing that did strike me, though, is that the process of loading cards, even had it gone smoothly, is something that takes a bit of initial setup time on the part of the end user. And the convenience of paying by holding your phone near the terminal, instead of swiping a card, is somewhat questionable - especially if you use an iPhone wallet, or a case that lets you slide your ID and credit card right on the back.
To encourage users to adopt mobile payment technologies, there needs to be a minimum amount of work for a maximum reward. The work Loop, and many others in its same space, require is still an obstacle for the companies to overcome. And if consumers are going to take action in terms of either manually entering in their credit card details, whether with software-based solutions like PayPal or loading cards as with Loop, it would be ideal if there was something delivered in exchange for those efforts: like digital receipts, instant coupons, rewards or points, giveaways, or other benefits. Google Wallet so far has this part of the equation right, but doesn’t have the real-world adoption needed, as its solution at point-of-sale is based on NFC technology, which isn’t ubiquitous.
Loop, meanwhile, works at virtually any magstripe-enabled terminal in the U.S., but any sort of merchant program involving offers or rewards is still a ways off. It’s the proverbial chicken-and-egg scenario: Loop needs adoption to attract the merchants, but needs merchants and offers to attract a wider group of users.
That being said, the company easily surpassed its Kickstarter campaign’s goal, indicating that there is at least a core early adopter audience willing to test, and possibly evangelize, the technology if all goes well.