Maybe you’ve heard: Big technology companies are frantically trying to get rid of credit cards.
It’s a worthy goal, actually. Many people carry around purses or wallets that are bloated and bursting with plastic cards. And for what? Each sheet of hard plastic exists solely to bear a magnetic strip that you can run through card readers at checkout.
The dream is to let you pay for things, quickly and easily, with the swipe of your phone. Or, someday, your watch. Fast, convenient, secure — and cardless.
It’s not going so well, though. The world’s shops, gas stations and restaurants already have all the equipment they care to install: standard credit-card readers. They’re not interested in buying something new just to accommodate, for example, Android phones that are compatible with Google’s Wallet payment system.
But now there’s something new called the Loop, which began life as a successful Kickstarter project. It’s instantly compatible with those hundreds of millions of existing credit-card readers. But it still lets you pay for stuff without ever extracting any plastic from your wallet or purse.
It does that by sending out a magnetic signal that tricks the credit-card reader into thinking that you’ve actually swiped a card through it.
I’ll wait here while you read that again.
This is the part that’s hard to believe. You wave the Loop near the card-reader slot, up to a couple of inches away, and — beep! — you’ve just paid. (Inside the Loop, there’s an inductive magnetic loop of wire that generates an alternating current. Hence the name.)
I’ve paid for things at about 20 shops and restaurants with my Loop. It worked every time — and dropped a lot of cashiers’ jaws.
What’s wild is that although every single clerk has been amazed, I haven’t yet encountered one who was suspicious. When that card reader displays the “Card Authorized” message — well, its word goes.
(Actually, a few cashiers never even noticed. You know those card readers at drugstores, on your side of the counter, where you swipe your own card? The cashiers usually don’t even see what you’re doing. For all they know, you swiped a card.)
Right now, you can buy the Loop as a $40 white plastic square fob; that’s what I tested.
In April, you’ll be able to buy an iPhone case ($100) with the Loop transmitter built in. The case will also include a backup battery, something like the Mophie case; it will give your iPhone 60 percent more juice to get through the day.
I’ll admit it: That this thing works at all is amazing. It is, as Arthur C. Clarke might have said, nearly indistinguishable from magic.
But understanding and using it takes a bit more study — and pondering its likelihood of success takes even more effort.
To set up the Loop fob, you insert its plug into your phone’s headphone jack. The free companion app guides you through setting up a Loop account and confirming your identity; for example, you have to choose a former address of yours from a list of bogus ones. (The app is for iPhone right now; an Android version is in the works.)
Next, you hit the + button and start swiping in your credit cards; on the back of the fob, there’s a slot for swiping. (If you’ve ever seen one of those Square credit-card readers that you plug into your smartphone — well, this thing is almost identical. But bigger.)
You really have to guide the card smoothly, slowly and completely through the slot, or the “read” fails. It takes practice.
But after each swipe, you can name the card (“Citibank Visa” or whatever), enter its security code and 800 number, and choose a photo of it (you can choose a canned stock photo or take a photo of your actual card). You record your signature with your finger on the screen. Within a few minutes, you’ve got your entire wallet full of credit cards, debit cards, gift cards and loyalty cards stored in the app.
You can even photograph the front and back of your driver’s license, for when you’re asked for ID. (I was never asked for it, so I have no idea whether an onscreen depiction of a license would be acceptable to a cashier.)
Now, then: With the fob still inserted in the phone, you can march up to any credit-card reading machine in any shop. In the app, you tap the picture of the card you want to use — and the deed is done. Accept your applause and your receipt.
There are two categories of payment station where the Loop definitely doesn’t work: gas pumps and cash machines. Those are places where you’re supposed to dip your credit card, and that’s something the Loop can’t do. For that reason, even the Loop’s inventors recommend that you still carry one real credit card with you. (Those inventors include, by the way, George Wallner, whose former company, years ago, developed the original credit-card reader itself.)
Fortunately, the fob doesn’t have to be in the phone. You can also hold it near the card-reader slot and press a small button on its side. It transmits the information for whatever card you’ve designated as your default card.
This detached mode, called Button Pay mode, is important, because it means that the fob can act as a credit card. It’s live. It’s a security risk.
For that reason, you can turn Button Pay off if you like. Or you can limit the fob’s Button Pay powers to 10 minutes (great when you’re handing it to a waiter to pay for dinner) or eight hours (great when you’re loaning it to your teen for a field trip or date night). After that interval, the card information is erased, and the fob is worthless.
Now, the brains of most people who hear about the Loop, or see it in action, are immediately crowded with questions, so let’s plow through them:
I’m worried about security. What if someone steals my phone?
You have to enter a four-digit code every single time you open the Loop app. So the bad guy won’t get far, even if he has a Loop fob of his own.
What if someone steals my fob?
If you haven’t turned on Button Pay (detached) mode, nothing. The fob is a dead piece of plastic.
If you have turned on Button Pay, then you’d call your credit-card company and report the card lost or stolen. You won’t be liable for any expenditures.
What if my phone dies?
The fob has its own battery; it charges with a USB cable. It works fine if the phone is dead (in Button Pay mode, of course).
Couldn’t a waiter or cashier buy her own Loop — and then use it to record customers’ credit-card information by secretly swiping their cards?
No. Remember that ID verification? If the card name doesn’t match your name, then the Loop app won’t accept it.
Couldn’t a hacker design a receiver that intercepts the magnetic signal my Loop is sending?
Well, the signal emanates only a couple of inches from the Loop, so the bad guy’s machine would have to be pretty darned close. He’d be a lot smarter to hack the card reader itself, since he’ll intercept thousands more credit-card swipes than Loop broadcasts. (That’s what happened at Target stores, by the way: The credit-card reader itself was rigged to intercept card swipes.)
Are there any new fees?
No. It doesn’t cost anything extra to use the Loop.
So now I have to carry around this little plastic fob. Is that so much easier than carrying around a wallet?
Well, first of all, the Loop comes with a silicone “bumper” that you can attach to your key ring. That should make it easier to carry around.
But, frankly, I agree with you. Unless you have a huge number of credit cards, carrying around and using the fob really doesn’t solve much of a problem. You save some bulk. You eliminate the fear of leaving your Visa card behind somewhere. But you also gain the hassle of carrying around that fob — and keeping it charged up.
Ah, but that’s where the ChargeCase comes in (the upcoming phone case with the Loop built in). You carry your phone around anyway — so integrating the Loop with it makes tremendous sense. Now you’re definitely reducing bulk and the number of things you have to carry. And you eliminate the hassle of having to charge an additional gadget; you charge the case when you charge the phone.
LoopPay Inc. has big plans for the future. Someday, the Loop could be built into smartwatches, or right into phones themselves. And, someday, the software could do a lot more than let you tap which card you want to use for payment. Companies could send you rebates, discounts or even one-time-use credit-card numbers; since it’s all software, the sky’s the limit.
For now, the $40 Loop fob is primarily an impressive parlor trick that doesn’t seem worth the fuss. The $100 phone case, though, will make the Loop a lot more interesting, especially for people with a bunch of cards causing unsightly bulges in their pants or purses. It’s truly dazzling technology that just needs to find the right form of expression.