Testing out Loop’s programmable credit card

Boston payments startup Loop on Wednesday has released its interesting take on the digital wallet to consumers, selling a programmable fob and a charge case on its website and launching its payments app in the iTunes App Store.

Loop’s technology is similar to that of Coin, which has been attracting a lot more attention to its forthcoming universal credit card. Both technologies offer hardware that will emulate the magnetic strip on any credit, debit or loyalty card. The main difference is that Coin has built what amounts to an electronic card you can swipe at any terminal, while Loop’s fob is contactless, generating a magnetic field that any point-of-sale terminal can read when within a few inches.

Loop Fobs

I had the chance to test out Loop’s $39 fob this week. The fob, about the size of a box of Tic Tacs, plugged into my iPhone(s aapl) — Loop says an Android(s goog) app is in development –through the audio jack where it connects to Loop’s credit card management app. You enter your card data through the fob’s magnetic reader, and from there you add security data and then select the level of access for each payment method. The fob can be locked to a specific phone so no one else can access it if lost or stolen.

The Fob doesn’t need to be attached to the phone the work, but it will need to be connected to the phone for you to select the card you want to use. You can also give the fob a time limit on which to handle a transaction before it goes inactive. For instance, you can set it for 10 minutes if you want to hand it to a waiter to pay a restaurant bill, or for a day if you want to give it to your son to take along on a school field trip. Or you can select no limit at all. Once the time limit is up, the fob will stop working until it’s plugged back into its paired phone.

Where I used Loop, the experience was surprisingly seamless. When you’re ready to pay you press a button on the fob and then tap or wave the device near the magnetic strip reader on the point-of-sale terminal. The terminal behaves exactly as if you swiped plastic.

Loop Fob payments terminal

I originally thought the biggest obstacle I would face wouldn’t be a technology limitation but the reaction of merchants. After all, I was waving some strange gadget in front of their check-out stands, and my credit card data would  magically appear. But so far that hasn’t proved the case. At Trader Joe’s I paid for a $50 grocery bill with Loop, fully expecting to be stopped or asked to present my physical debit card. The check-out clerk’s reaction was simply: “Cool.”

I found it a bit annoying that there was no connection between my phone and the fob unless they are physically linked. That means to switch between cards I have loaded in the fob, I have to plug it into my phone’s audio jack, open the app, enter my PIN, select the card I want to use and then unplug. In my mind, it’s just easier to go into my wallet and pull out the physical plastic.

But I definitely see the appeal of reducing the clutter in my wallet and pockets, and judging by the enormous interest more tech-savvy consumers are taking in Coin, a lot of people see that appeal as well. The advantage of Loop and Coin’s technology is they don’t require building payments networks or any near-field communications (NFC) chip in the phone like Isis or Google Wallet. It just works at any payments terminal that will swipe a cards; at least until the U.S. moves over to the chip and PIN transaction technology now standard in Europe.