It seems like leading up to Apple’s big reveal everyone was speculating what Apple’s payment service would or wouldn’t be. Now that we finally know some concrete details we have an idea of what to expect next month. Why wait? There is already a neat mobile payment system available for your iPhone called Loop.
Developed by a Boston-based startup, the Loop mobile payment system combines both hardware, software and state of the art encryption to allow you to carry around all of your credit cards with you on your iPhone and leave your wallet at home (at least in theory). The system is available in two versions, a $39 LoopPay Fob or $99 special Loop iPhone 5 battery case, both of which work in conjunction with the free LoopWallet app.
I have been using the LoopPay Fob for a little over a month or two and I’ll give you a brief run down of how the system works, what I liked and didn’t like and a few final impressions.
When not in its little protective rubber bumper, the LoopPay Fob pretty much resembles a (slightly bigger) Square Card reader. It attatches to your phone via the headphone jack and the first time you use it, you bind it to your iOS device via the companion app. That means it can only be used with that one device. Each subsequent time you attach it, the LoopPay Fob gets initialized before your selected credit card data is loaded onto it.
Adding credit cards to the app is as simple as swiping them through the slot on the LoopPay Fob, much like a store register. Loop claims that card information is stored “with the highest level of security. LoopPay uses a highly secure, payment industry-approved chip to store all your card data”. Unfortunately the app itself is only protected by a 4 digit pin-code and is probably the weakest link in the system as once someone gains access to the app, they can read the credit card numbers you have stored within the app. I can’t help but wonder how long it’ll take an enterprising your criminal or pick pocket with and iPhone and one of these LoopPay Fobs of their own to start swiping quite a few credit cards pretty quickly (but I digress) .
How do payments work?
When it comes to making a payment, you can either do so with the LoopPay Fob still attached to the phone or use the LoopPay Fob on its own (it has a long-lasting rechargeable battery). Only one your credit cards’ information is actually stored on the LoopPay Fob at any given time and there is a small button which can be used trigger payment. The functionality of this button can be toggled between Always Enabled, Enabled for ten minutes (for “giving to a waiter”), Eight hours (for “giving to your kid”…yeah right!) or Never Enabled so that the phone must be attached to make payments.
To pay with the LoopPay Fob you simply hold the back of the Fob against the credit card reader and press the button. It then plays the (inaudible) sound of the magnetic strip back to the reader and like magic…it is accepted. I’ve done it quite a few times now and it never ceases to amaze me that this actually works.
However there are limitations…
Loop claims that LoopPay is “accepted at tens of millions of retailers around the world, LoopPay works at 90% of stores and restaurants that use credit and debit card readers – no special equipment needed.” but in my real world experience, I found quite a few places that I regularly frequent at which I was unable to use it. This is because the LoopPay only works with payment portals where one side of the slot where you slide your card is open. If you have to slide your card into a slot with tracks on both sides (“dip” system of the payment) like at most ATMs or gas stations then it will not work…so you can’t quite ditch that wallet just yet.
There still is not perfect digital wallet replacement. Even Apple isn’t immune and their Apple Pay system will have its own set limitations as well, For instance it will only work at certain retailers when it first rolls out.
Let’s address the pink elephant in the room…
Technical limitations aside, THE biggest hurdle that the Loop faces with LoopPay is social acceptance. With all of the recent big news stories of credit cards being compromised at Target, Home Depot etc, people are (justifiably) paranoid about Credit Cards. So imagine seeing someone stick a little device or their cell phone up to credit card reader at the local shop can and I’m sure it will (at least on occasion) be met with furtive glances.
Now my reservations could be way off as I was pretty surprised by how quickly people seemed to embrace the Square card reader and be willing to use their credit cards in one. The idea of swiping my credit card info into someone else’s phone seemed like a huge security risk…how do you know they are legit and not just trying to steal my info, yet there are a number of competing companies in this space. With the Loop now being sold in Staples Stores and Apple Pay on the horizon, the idea of putting your phone up to the credit card payment portal will soon become as ubiquitous as any other payment method. So arguably instead of driving companies like Loop out of business Apple may in fact actually help them gain greater acceptance, more rapidly and likely birthing new competitors along the way, especially in the non-iPhone space.
I have tried the LoopPay Fob in a number of different shopping situations. Ignoring the places I was unable to use it, I tried it at several grocery stores, and other merchants. Before heading out for a day of shopping I activate the LoopPay Fob with the 8 hour setting so I wouldn’t have to fiddle with it in the store. I kind of wish there was a one or two our option instead, just in case I misplaced it, though the Fob is a bit chunky, so odds of that happening are pretty slim.
Feeling certain that someone would accuse me of criminal activity, and wanting to get comfortable with the device (it’s actually dead simple to use) at first I concentrated on using only self-checkout aisles and everything worked great. Then I used it at a few stores where the credit card reader was within sight of the person manning the register. What I found was that people didn’t even look, they couldn’t care less what you stuck in that credit card reader as long as it showed that the payment went through.
To be fair, all of my purchases were for amounts lower than those requiring a signature. To cover the (need ID) scenario, the Loop Wallet can store photos of your license as well as the front and back of your credit cards. Which is nice and all, but I know is that if I were a store clerk and someone tried to hand me a ‘photo’ of their license instead of the real thing, I sure as heck would be calling over my manager in a heartbeat.
The thought of getting myself into this type of awkward encounter caused my social anxiety to kick in and try as I might, I just couldn’t put myself in this sort of situation. I can’t be the only one. Which brings up another strike against the LoopPay system, which is that instead of being a convenience and saving you time, it could actually cost you more time, especially in a situation like a restaurant where you are supposed to hand the LoopPay Fob over to your server, explain to them how to use it and let them go. Well there is no guarantee that they won’t come immediately back informing you that their system doesn’t support it. Then how are you supposed to pay.
Social acceptance, a lack of universal support and a shift toward chipped credit cards are some of the big hurdles that the Loop still needs to address if they really want to help people ditch their wallets in favor of LoopPay. Getting in to stores like Staples is a nice start and a wish the company well because this is a really neat piece of tech. However, until they can resolve these the LoopPay Fob continues to feel more like a cool gadget for tech junkies than a viable, reliable payment method.