Tokenization-enabled mobile payments
In early 2013, LoopPay Inc. co-founders, Will Graylin and George Wallner, realized there should be a way for payments to leverage both the mobile devices consumers already carry and existing POS systems. Thus, Wallner, credited as the inventor of the modern retail POS infrastructure, began working on mobile transmission and tokenization for mobile payments.
"We realized that mobile payments are the future of commerce," Graylin, Chief Executive Officer of LoopPay, said. "But all of the options that existed just didn't work in a way that's simple, secure and cost-effective for retailers and consumers. So, we decided to create a technology that enables mobile payments without costly infrastructure updates." Magnetic Secure Transmission (MST) is LoopPay's patented technology designed to do just that.
What is mobile tokenization?
Mobile tokenization is intended for card issuers seeking to virtualize and secure mag stripe cards and move transactions from physical cards to virtual environments, such as smartphones.
Mag stripe cards' static data can be easily copied and used time and again. Smart cards (such as those equipped with Europay/MasterCard/Visa technology) address this weakness with a microchip that can "sign" transactions with cryptographically generated dynamic data based on a secret key stored in the card. The smart card concept has been adapted to contactless cards and mobile phones using near field communication (NFC). Unfortunately, achieving mobile payment security through NFC requires new POS equipment, which makes widespread mobile payment adoption costly and slow, according to LoopPay.
"Security is always a compromise between protection and cost," said Wallner, LoopPay's Chief Technologist. "Mobile tokenization, however, maintains compatibility with the existing retailer and acquirer infrastructure while providing good security at low cost."
Unlike cards, mobile devices can be loaded over-the-air with tokenized cards that contain one-time cryptographic signatures, LoopPay stated. These signatures are generated in the cloud by card issuers; each signature is good for only one transaction. Signatures can expire and be cancelled without necessitating card cancellation. Once a signature is used for one transaction and authorized by the user, a new one is generated in the cloud to replace it. This reduces the card issuers' security exposure and allows for simpler mobile architectures.
Magnetic transmission, mobile tokenization
LoopPay's magnetic induction technology enables contactless POS transactions without requiring POS hardware or software changes. LoopPay's MST formats card data into simulated mag stripe tracks and transmits them via magnetic pulses, which can be read by existing mag stripe readers. The contactless transfer distance is from one to three inches.
"MST essentially repurposes the ordinary mag stripe readers for mobile payments so that mobile phones can make contactless card payments at the existing retail infrastructures," Wallner said. "And because the track data is simulated, it doesn't have to be the original mag stripe data; it can be dynamic tokenized card data. This creates an opportunity to replace magnetic stripe transactions with secure mobile transactions – all without the disruptive delays and the significant costs of retail system upgrades." This makes security attainable to millions of merchants, he added.
The convenience of LoopPay
Mobile tokenization also gives merchants the data needed for effective customer engagement, and will work with future infrastructures that comply with the EMVCo Tokenization Framework, LoopPay stated. The company added that its mobile wallet is the only such solution that works at 90 percent of retailers today.
LoopWallet, the free LoopPay app, is available for iOS and Android devices. The password-protected app securely stores and organizes all user-designated credit, debit, gift, and loyalty cards, as well as IDs and passwords. Using a LoopPay app and device, such as a key fob, a consumer can press the device to make a quick payment. This feature, called Button Pay, is popular with consumers, according to LoopPay.
LoopPay's devices are LoopPay Fob and LoopPay ChargeCase. However, LoopPay's technology can be embedded in any device – from key fobs and battery cases to, eventually, mobile phones and wearable devices such as smart watches and glasses.
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