Why Synchrony Invested in Loop

It has been a good week for LoopPay; the mobile payment system that allows users to pay almost anywhere credit and debits cards are accepted with their mobile phone. On Wednesday, Synchrony Financial, the GE Capital spinoff (that is about to be IPO’d) and the nation’s biggest issuer of private label cards, has announced a strategic investment in mobile payments company LoopPay.

Though the financial details of the investment have yet to be disclosed, the investment is a big pick-up for LoopPay as it races to standout in a field increasingly crowded with mPay solutions. Market Platform Dynamics CEO Karen Webster caught up with Loop’s CEO Will Graylin just hours after the deal was announced. Graylin told Webster that this deal with Synchrony—which promises to be the first in a series of strategic investments to be announced in 2014—grew from the private label card issuer’s desire bring real payments innovation to their customer and retailer base now.

(Jump to 0:54) “Synchrony was the first one to come in and the reason they are coming in at this time is because they really see the value of what LoopPay brings not only to their cardholders but their retailer partners who are issuing private label cards. What Loop is doing represents a real innovation and break through in mobile payments to allow consumers to finally be able to load their cards directly onto their phones and use them just about anywhere without merchants having to replace their terminals.”

The immediate functionality of the Loop mWallet is its main draw, according to Graylin. Users need only load the cards from their physical wallet into their virtual Loop Wallet, attach Loop’s hardware and go.  Because Loop’s hardware interacts with almost any POS terminal that accepts plastic, there is no need to be on the lookout for a merchant that will accept it, because almost all merchants will.

(Jump to 3:03) “What that means is consumers can finally use their phones as a literal an instrument to store and organize all their cards and be able to use them just about everywhere so they can replace their existing wallets. I currently don’t carry my wallet with me anymore because that all my cards are stored on a Loop enable device. What that allows is a level of convenience that hasn’t been there before. “

Graylin noted that, more than the ability to offer convenience, Synchrony also took interest in Loop because of the company’s ability to offer greater security.  He noted that Loop is working to build tokenized transactions that will move across the mag stripe rails. This provides an EMV-like level of security, but, like the company’s mobile wallet, doesn’t involve a costly upgrade to retailer’s point of sale technology.

(Jump to 4:55) “These are the things we are working together with GE and eventually we will look to provide this to everybody in the card issuing to world. To be able to provide EMV-like security but using the existing rails to have that immediate effect on security and provide mobile payments all in one fell swoop.”

Graylin notes that while EMV is a train that continues to move, it is still essentially a movement to protect plastic cards. Since plastic cards have a long future ahead of them, it is a solution that does make sense to pursue.

However, he says, mobile payments have the ability to do EMV one better because mobile retailers can offer consumers EMV-level security, without an incredibly expensive upgrade. Moreover, Graylin notes, Loop’s mWallet doesn’t want to just provide for secure transactions in physical locations, it also wants to create secure digital transactions as well—which is appealing to Synchrony and other issuers.

(Jump to 9:52) “We’re not just talking about a providing dynamic tokenized card data on point of sale but we’re also working toward having the solution being provided for online and mobile payments as well.”

Loop and GE are now working together to provide a customized solution for Synchrony cardholders that will provide enhanced consumer insight into real time spending data and an easier to use mobile experience.

(Jump to 5:29) “We’ve been going through some internal pilots with the current Loop solution and we’ve been very pleased with the results we’ve seen so far.  What we’re doing right now is working together to create a terrific customized solution that allows for an event better consumer experience, to provide real time data for card holders, to be able to remotely provision cards and to create a really usable experience for Synchrony’s cardholders and retail partners.”

There is no set date for a public launch of the new custom products, though Graylin believes it will be across the next few quarters.

Also to be announced in the not-to-distant future are some other planned strategic partnerships for Loop, Graylin promised Webster he would keep PYMNTS readers and listeners posted.

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