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Smartphone invention promises to eliminate credit card swiping

Jay MacDonald

If today’s blog were a personals ad, here’s how it might read:

BRIGHT YOUNG ACCESSORY seeks dumb-jock point-of-sale terminal for intimate card-free debit and credit transactions, maybe more. No physical contact. I’ll call you.

Ever since cellphones became sentient, their software developers have been speed-dating with North America’s Neanderthal mag-stripe-reading card terminals, hoping to leverage the phone’s smarts to improve upon the outdated card swipe protocol with its numerous security risks.

The latest entrant to this technological courting ritual is Loop, an inexpensive smartphone attachment that its Palo Alto, Calif., developers claim can execute a card-free electronic transaction with 90 percent of the mag-stripe terminals in this country.

How’s that possible? Team Loop has figured out a way to turn the inductive charging feature on a smartphone into a transmitter that can manipulate the point-of-sale mag-stripe reader into accepting electronic card data stored on the phone as if the card itself had actually been swiped.

The Loop accessory comes in two varieties — a charger case, and a dongle that plugs into the headphone jack on iPhone and Android smartphones. Both send a wireless signal that the card reader accepts as if a card has been swiped.

Once you download the LoopWallet app, you’re just a few swipes away from storing and managing all of your credit, gift, loyalty and membership cards on your phone, which displays them peeking out from an electronic wallet slot graphic.

How secure is this young ingenue? For starters, everything is locked up with a four-digit PIN, as you might expect. Should your phone go missing, it would be useless as a payment device without your user name and password, as the company stores no user data on its servers.

While you have to hold the $34 Loop fob (or the $99 iPhone 5/5s ChargeCase) within four inches of the terminal’s magnetic read head to pull off this prestidigitation, the POS terminal need not contain near-field communication (NFC) technology to get the message.

That may come as an inconvenient surprise to a few major speed daters, including Google, Isis and even MasterCard, which have been competing to develop an NFC-based card-free mobile payment system.

But the biggest buzz kill to this budding romance may be the lumbering approach of smart cards. Chip-enabled EMV (for Europay, MasterCard and Visa) cards and the terminals to support them are expected to roll out across North American beginning in 2015. At which point Loop may be left out of the loop, as it won’t be able to work its magic on an EMV terminal.

But until then, Loop may well become a popular gee-whiz transitional device for those fed up with fumbling for a credit card when their smart phone is already in hand.

If you’re tempted, be forewarned: Loop won’t work in the dip-style terminals that are commonplace at ATMs and gas pumps and it won’t ship until after New Year’s, so don’t set your heart on a card-free Black Friday this season.

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