Two payments industry veterans have come up with a way to make mobile phones and terminals communicate without swiping a card or sending a Near Field Communication signal.
The Loop Fob and Loop ChargeCase send a magnetic transmission to a payment terminal’s mag stripe reader through a process dubbed Magnetic Secure Transmission, or MST. It turns the mag stripe reader into a receiver, without upgrading the terminal’s hardware or software.
“It’s probably better than with magnetic swipe,” George Wallner, Loop chief technology officer, tells ISO&Agent Weekly. “We provide a cleaner, better transmission than comes out of the mag swipe.”
Wallner, who’s credited with pioneering mag stripe readers in the 1980s as Hypercom CEO, developed MST late last year. He’s working with Will Wang Graylin, who helped turn mobile phones into payment terminals at ROAM Data.
Last month, Graylin and Wallne changed the name of their company from ActPay to Loop, and they introduced their two products today at the Money2020 trade show.
With both devices, users select a card to use, place the mobile phone or device near the credit card reader and press the transmit button on the screen or device. The signal is sent and the credit card terminal accepts the transmission.
The devices work with 90% of terminals but aren’t compatible with ATMs or gasoline pumps, Wallner says.
The Loop Fob, a small audio jack device with a built-in card reader, stores cards encrypted into a secure memory module. A microprocessor and a magnetic induction loop enable users to transmit card data to just about any merchant card reader.
The $34 fob will be compatible with iOS and Android devices, but not right away. The iOS app is expected to become available for download in December, and the Android app will be available in the first quarter next year, the company says.
It transmits card data while attached to a phone or on its own without a phone.
The fob also loads cards onto a mobile phone.
The $99 Loop ChargeCase, a protective case that provides a secure wallet, also delivers up to 60% more battery power for an iPhone 5 or 5s. It comes with an audio jack mag stripe reader that consumers use to swipe mag stripe cards into the Loop device.
Consumers can swipe all of their mag stripe cards into a secure chip in the ChargeCase with an audio jack reader that the company provides or with the integrated card reader on the fob.
“This is in contrast to NFC, where you have to go to a bank and have cards downloaded,” Wallner says. “NFC’s so complicated that it hasn’t taken off.”
Moreover, the Loop devices accept any card, unlike NFC-powered mobile wallets that offer only a few cards, notes Damien Balsan, who joined Loop after leading a PayPal POS team.
“These [NFC] wallets were conceived with the wrong mind set,” Wallner says. “They’re trying to use wallets to control cards. With loop you decide what cards to load. It’s yours, not ours.”
Loop gives consumers control of their mobile wallets, Wallner says. They can load credit, debit, gift, membership and loyalty cards into a fob or ChargeCase. They can even scan in identification cards, membership cards, receipts and passwords.
The MST technology in the fob and case generates changing magnetic fields over a short time. It’s accomplished by putting alternating current through an inductive loop, which the magnetic read head of a card reader can receive. The transmission emulates the magnetic field change over time as when a mag stripe card is swiped across the same read head.
Loop works within 4 inches of the read head, and the field dissipates rapidly beyond that point, and exists only when a user initiates a transmission.
The company made its first successful consumer transaction at Beacon Grill in Woburn, Mass., in March.
It’s testing 100 Loop Fob prototypes and 100 ChargeCases. Full-scale production could begin around the first of the year.
Loop hopes to sell the fobs on cards at near the point of sale. The devices could come already loaded with the merchant’s loyalty and rewards programs.
Those loyalty programs could offer rewards that would propel mom and pop stores into the same league as Starbucks, Balsan says.
ISOs could promote the devices to merchants in exchange for a share of the revenue generated by the marketing programs that Loop plans to load onto the devices, Wallner says. n