Apple Pay was announced with great fanfare three months ago, but a small company that began on Kickstarter called LoopPay may have already established a significant competitive advantage over Apple Pay.
The big factor with virtual wallets is where can you use them. Currently, Apple Pay can be used at approximately 2% of retail locations. But LoopPay boasts acceptance at over 90% of retail locations.
LoopPay is not an actual phone but a case for your smartphone paired with the LoopPay app. It has a small removable transmitter that fits in the case, and it has room for a drivers license and a backup credit card.
What sets LoopPay apart from Apple Pay is its ability to interact with the payment systems that most retailers currently have in place. It does this by wirelessly mimicking the magnetic stripe on the back of your credit card. When you hold the LoopPay case near the credit card swipe slot and press the LoopPay button, it sends an electromagnetic pulse with your credit card number to the credit card reader.
In a recent Consumer Reports review, LoopPay was given higher overall scores than Apple Pay, Google Wallet and Softcard, mainly because of its wide spread acceptance.
In my initial two week test of LoopPay, I have to agree. I was able to complete transactions almost 90% of the time that I used LoopPay at any retail store. I successfully used LoopPay at Walmart, Walgreens, McDonalds, Burger King, Taco Bell and Target. Honestly, the only real trouble I had with LoopPay was at “mom and pop” stores and at gas stations where the card readers actually require a physical card to be inserted.
The fact it is so widely accepted and the case can carry your drivers license and a backup credit card truly means it is a virtual wallet. I have now replaced my wallet with the LoopPay case. If LoopPay doesn’t work or a physical card is required, I just use the backup credit card found in the case.
One concern with LoopPay is what will happen when the United States starts to switch to chip and pin technology in credit cards in 2015. This new technology will make it harder for crooks to make counterfeit credit cards since a transaction will not just require your credit card number but a number issued by a chip embedded in your physical credit card. LoopPay has promised that future upgrades will handle chip and pin as well as other security measures.
Will Graylin, CEO of LoopPay is thinking about security in the future of LoopPay and was quoted as saying, “We’re adding biometric as well. What you will see in the next version is that we have added a fingerprint-sensor for convenience and security. We’ve also been working with major payments players like Visa and big issuers to extend those same tokenization capabilities on to the LoopPay platform.”